A recent guidance opinion document from the Brazilian Securities and Exchange Commission (CVM) discusses the topic of crypto-based securities.
The document defines cryptocurrencies as digitally represented assets that are protected by cryptography technology and can be transacted with and stored using Distributed Ledger Technologies (DLT), while acknowledging that there is still a regulatory vacuum on the topic as a result of the lack of specific regulation.
The new standards require that tokens that qualify as securities be digital representations of certain types of legal instruments. This includes certificates of deposit of securities, debentures, debenture notes, right coupons, shares, subscription receipts, and more.
Similarly, different types of tokens may also qualify as securities based on their classification. The CVM further stressed that although the tokenization of assets will not require prior approval or registration with the commissioner, it would still need to abide by existing security legislation if the resulting assets are regarded as securities.
Additionally, the document categorises cryptocurrency holdings into three groups. The first is referred to as payment tokens, and it consists of assets that aim to emulate the roles of fiat currency as an exchange medium, a unit of account, and a store of value.
Local cryptocurrency exchange Mercado Bitcoin was served with a subpoena by the CVM last month about its fixed-income token investment offerings.
