Brazil's CVM Advances Securities Tokenization Sandbox Pilot
According to industry media Ledger Insights on September 18, the Brazilian Securities and Exchange Commission (CVM) is advancing a pilot program using distributed ledger technology (DLT) to test the application of securities tokenization in the capital markets. The program currently only involves simulated trading and does not involve any real securities or real investor funds.
This pilot is coordinated by a dedicated tokenization working group (GTT) established within the CVM, with a testing period set for 60 days, extendable by another 30 days if necessary. A related draft has been submitted and awaits formal approval from the CVM board before implementation can begin.
The GTT was established in July 2026, composed of 14 departments within the CVM, and can consult other government agencies, market associations, self-regulatory organizations, and external experts as needed. The group was initially tasked with submitting a preliminary plan within 60 days of its formal establishment, with an overall review period of 120 days, which can also be extended by 30 days. Its core responsibility is to develop an experimental regulatory framework around the application of DLT in securities registration, custody, trading, and settlement, covering specific topics such as official ownership records on the blockchain, private key custody mechanisms, transaction revocability procedures, and system liability allocation rules.
The announced simulated testing plan covers four types of securities: stocks, bonds, receivables certificates (CR), and investment fund shares, with the testing scope covering most stages of the securities lifecycle, from issuance to settlement. Participants need to assess the technical feasibility, operational feasibility, and legal feasibility of applying DLT in the capital markets, while exploring interoperability between different blockchain networks and identifying gaps in the current regulatory framework.
Before launching this round of the pilot, the CVM had previously conducted a regulatory sandbox experiment based on blockchain for securities issuance and secondary market trading. The newly established GTT will review past pilot results while studying cybersecurity risks and international regulatory experiences. According to previously disclosed data, Brazil's real-world asset (RWA) tokenization market has reached approximately 12 billion reais (about $2.34 billion), with tokenization of bonds and commercial papers accounting for about $1.3 billion.
From an institutional design perspective, the essence of this pilot is for the regulatory agency to test the impact of new technologies on existing securities registration, custody, trading, and settlement infrastructures in a zero-risk simulated environment before formal legislation. Participants do not need to bear the risks of real funds and real investor rights, allowing for early exposure of potential issues with DLT in inter-agency connections and legal liability determinations. Beneficiaries include technology service providers and financial institutions that wish to engage early in the construction of Brazil's tokenized securities infrastructure, enabling them to participate in the rule-making process and gain first-mover advantages. If the pilot ultimately promotes formal legislation, traditional intermediary institutions that rely on centralized registration and custody systems may face pressure to redefine their business models.
After the pilot concludes, all participants must submit reports summarizing the final evaluation results, which may further translate into specific regulatory rule revision proposals or even legislative adjustment recommendations.
Source: Public Information
ABAB AI Insight
The CVM is not taking a leap forward in advancing the regulatory framework for securities tokenization but is continuing a gradual approach. Even before establishing the GTT working group, the CVM had already conducted regulatory sandbox experiments for blockchain-based securities issuance and secondary market trading. In July 2026, the CVM further established the GTT, composed of 14 internal departments, completing the institutional design process from "establishing the working group to forming a draft" to "submitting for board approval" in about two months. This rhythm of "first small-scale sandbox validation, then gradually expanding to cross-lifecycle simulated testing" is a typical cautious approach taken by regulatory agencies towards emerging financial technologies.
From the perspective of resource investment, the core resources mobilized by the CVM this time are regulatory approval processes and cross-departmental coordination capabilities, rather than direct financial investment. By forming a working group covering 14 internal departments and reserving space for consulting external experts and market associations, the CVM is effectively using administrative resources to ensure the completeness of institutional design and industry recognition. Meanwhile, Brazil's overall real-world asset tokenization market has reached a scale of approximately $2.34 billion, with a significant proportion of tokenization in bonds and commercial papers, indicating that market-level funds and assets have already completed preliminary tokenization attempts ahead of the regulatory framework, making the regulatory pilot a recognition and normalization of existing market practices to some extent.
A comparable case is the EU's previously launched DLT Pilot Regime, which similarly allows market participants to use distributed ledger technology for securities issuance and trading experiments within a limited scope to collect empirical data needed for regulation and improve formal legislation based on that. Currently, major capital market regulatory agencies worldwide are mostly in a similar three-stage path of "sandbox pilot - data collection - legislative improvement," and Brazil's simulated testing plan is a specific implementation of this global regulatory path in the Latin American market.
This event essentially reflects a structural catch-up after the regulatory framework lagged behind market practices: the market practice of securities tokenization (approximately $2.34 billion scale) has emerged ahead of mature regulatory rules. The CVM chooses to use a "zero-risk simulated environment + fixed-period testing + results feedback for legislation" mechanism to gradually bring market behaviors that might have long been in a regulatory vacuum into a controllable institutional framework. Mechanically, this approach is effective because it breaks down the high-risk, irreversible legislative decision of "whether to allow tokenized securities to circulate in various stages of the capital market lifecycle" into a gradual process that can first be tested repeatedly in a simulated environment and gradually accumulate evidence, thereby reducing the risk of regulatory agencies making erroneous legislative judgments due to insufficient information.
ABAB News · Cognitive Law
- The market runs first, and regulation follows, never the other way around.
- A zero-risk sandbox is a necessary path to real legislation.
- The completeness of institutional design is more important than the speed of rollout.