Brazil's Regulatory Authority CVM Plans to Launch Tokenization Program Sandbox in 2024

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Speaking at the Rio Innovation Week on October 4, Daniel Maeda, the Superintendent of institutional investor Supervision at Brazil’s Comissão de Valores Mobiliários (CVM), announced plans to launch a second regulatory sandbox program in 2024. Through this sandbox program, they aim to explore the various use cases of tokenization. 

This move is expected to attract stakeholders from established financial institutions and startups eager to harness the potential of tokenized assets. CVM intends to provide a safe and controlled environment for such innovators to explore this technology without being subjected to the full range of regulations that typically govern the industry. 

In his speech at the Rio Innovation Week, Maeda stressed that CVM wants to encourage innovation and is not setting strict boundaries or defining specific use cases. However, they are looking forward to tokenization applications in some specific regions, such as agribusiness and Environmental, Social, and Governance (ESG) sectors.

While highlighting the benefits of tokenization, Maeda said, “We, at CVM, saw many benefits in this market to leverage processes. Through tokenization, the investor gains in transparency and lower costs, in addition to increasing the democratisation of investments, which are values ​​that the commission carries.”

The Superintendent added that the CVM will wait for regulatory changes related to Brazil's crypto market, including any developments related to the country’s central bank digital currency (CBDC) - the Drex.

Maeda emphasised that the securities regulator and central bank should consider developments in the digital asset space to ensure that the country’s regulatory frameworks are aligned with global trends and best practices.

Brazil has strengthened crypto regulations, particularly in response to the surging crypto adoption. In June 2023, the Brazilian government passed a law clarifying the roles of the country’s central bank and securities regulator regarding crypto. It formally assigned responsibility for crypto regulation to the Central Bank of Brazil (BCB).

Brazil’s CVM is set to reshape the country’s financial landscape with its second regulatory sandbox program. Their past success in asset tokenization positions them well for further innovation in this field. As the 2023 launch date nears, the financial industry and tech enthusiasts look forward to the developments that will emerge from this initiative.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash