Brazil's securities regulator is shifting from research to hands-on testing as it builds a framework for tokenized securities issued on blockchain and other distributed ledger networks. In this setting, tokenization means representing securities digital tokens whose issuance, ownership and transfers are recorded on shared ledgers instead of traditional registries.

The Comissão de Valores Mobiliários (CVM) established a Tokenization Working Group in July with an initial 120-day mandate. The group draws on representatives from 14 areas of the regulator and is authorized to consult market associations, self-regulatory bodies and outside specialists.

Tokenization Framework Takes Shape

The group's mandate spans the registration, custody, trading and settlement of securities through distributed ledger technology, along with cybersecurity, interoperability, regulatory gaps and the broader impact of DLT infrastructure on Brazil's capital markets. The regulator required an initial proposal within 60 days of the group's creation, a deadline that has now produced a concrete step forward.

On Sept. 15, the working group delivered a draft resolution proposing the Programa Piloto DLT CVM, a pilot that would allow market participants to test blockchain-based infrastructure across several stages of the securities lifecycle. The proposed scope reaches from corporate debt instruments to fund units, giving the regulator a broad sample of how DLT behaves across different parts of Brazil's capital markets.

Experiments under the proposal could include:

• Stocks and debentures
• Receivables certificates
• Investment fund units
• Other securities and collective investment contracts
• Issuance, distribution, trading, custody and settlement

CVM Moves Toward Live Testing

According to the regulator, the pilot would assess whether DLT can operate effectively from technical, operational and legal perspectives. It would also examine interoperability between networks and identify risks, vulnerabilities and potential regulatory gaps.

The proposed tests would run for 60 days, with a possible extension of up to 30 days. CVM would monitor participating networks directly, including through mechanisms capable of providing real-time read access to transaction records — a setup that would let the regulator observe transaction activity as tests unfold.

The working group's overall 120-day mandate, which can be extended by another 30 days, remains in force. Its final report is expected to consolidate the pilot's findings and may inform future regulatory changes. The markers to watch from here are the pilot's testing window and that final report, the document expected to shape whether and how the experiments feed into standing rules.

With the draft resolution, Brazil's approach appears to be moving from general research toward controlled experimentation. Rather than imposing permanent blockchain rules outright, the CVM intends to use a pilot environment to evaluate how tokenized securities could fit within the country's existing capital-market structure — a sandbox-style route that lets supervisors observe new infrastructure under controlled conditions before deciding how it should be regulated.