Brazil's securities regulator, Comissão de Valores Mobiliários (CVM), is considering launching a second regulatory sandbox program in 2024. Daniel Maeda, the superintendent of institutional investor supervision with CVM, revealed plans to explore tokenization use cases in the sandbox, with a focus on areas such as agribusiness and environmental, social, and governance (ESG). The decision follows positive experiences with tokenizing approximately $36 million in assets. Maeda stated that the CVM would wait for changes related to Brazil's crypto market, including developments with the central bank's digital currency (CBDC), Drex.


Brazil's CVM Plans Second Regulatory Sandbox in 2024: Exploring Tokenization Use Cases


Brazil's securities regulator, Comissão de Valores Mobiliários (CVM), is considering launching a second regulatory sandbox program in 2024. Daniel Maeda, the superintendent of institutional investor supervision with CVM, revealed plans to explore tokenization use cases in the sandbox, with a focus on areas such as agribusiness and environmental, social, and governance (ESG). The decision follows positive experiences with tokenizing approximately $36 million in assets. Maeda stated that the CVM would wait for changes related to Brazil's crypto market, including developments with the central bank's digital currency (CBDC), Drex.


Speaking at Rio Innovation Week on Oct. 4, Daniel Maeda explained the CVM's approach to the regulatory sandbox program. He mentioned that the regulator would not define specific cases beforehand, allowing innovation to reach the CVM without prior limitations. However, areas like agribusiness and ESG have caught the CVM's attention for potential tokenization use cases.


The superintendent added that the CVM planned to wait for changes related to Brazil's crypto market, including those for the central bank's digital currency, the Drex. The CVM aims to consider developments in the digital asset space and evaluate how other countries have approached regulation.


"I have a lot of respect for the [United States SEC], and I don’t think it’s up to me to point out their stance as right or wrong," said Maeda. "What I can say is that we, at CVM, saw many benefits in this market for leveraging processes. Through tokenization, the investor gains transparency and lower costs, in addition to increasing the democratization of investments, which are values that the commission carries."


Brazil's central bank announced a tightening of regulations in October amid a significant surge in crypto adoption in the country. Governor Campos Neto specifically mentioned connections between using crypto and tax evasion or illicit activities.


In June, Brazilian President Luiz Inácio Lula da Silva signed a framework into law establishing the roles of the central bank and CVM in regulating digital assets. In November, Brazil plans to roll out a program issuing identification documents through a private blockchain as part of efforts to protect personal data and prevent fraud.


(TURNER WRIGHT, COINTELEGRAPH, 2023)