The Brazil Securities Commission has created a Tokenization Working Group to study, test and develop regulatory proposals for securities activities carried out on distributed ledger technology infrastructures. The group will cover registration, deposit, custody, trading and settlement of securities, with an initial focus on producing a proposal for an experimental regulatory regime for tokenized securities. The working group has an initial term of 120 days, extendable by 30 days. Its mandate includes comparative studies of domestic and international experience, review of regulatory sandbox results, engagement with regulators and market participants, and assessment of how distributed ledger technologies affect the functioning and structure of the capital markets. It will also examine cybersecurity issues, identify gaps in the current framework, coordinate prototype assessments in experimental environments and lay the groundwork for future regulation of securities tokenization. The group brings together representatives from 14 organizational units within the regulator and may also involve government bodies, self-regulatory organizations, market associations and invited experts. Within 60 days of its installation, the group must submit its proposal for an experimental regulatory regime to the CVM board. At the end of its work, it will deliver a final report setting out the activities conducted and recommendations made.

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