The Comissão de Valores Mobiliários (CVM) of Brazil announced that it would be exploring a regulatory “sandbox” for possible tokenization use cases starting as early as 2024 during the Rio Innovation Week. Daniel Maeda, the regulator’s superintendent of institutional investors supervision, said that the CVM would like innovation to reach it without prior limitations, mentioning areas such as agribusiness and ESG as catching its attention.

The regulator intends to wait for the implementation of changes related to Brazil’s cryptocurrency market including those for the country’s central bank digital currency, the Drex. Both the Securities regulator and the central bank should take into account developments in the digital assets space, as well as the way other countries have dealt with regulation.

In October,Brazil’s central bank announced the tightening of regulations and Governor Campos Neto made specific connections between the use of crypto and illicit activities, such as tax evasion. In June, A framework was signed into law by the President establishing the different roles the country’s central bank and CVM would have in regulating digital assets.

As part of its efforts to protect data and prevent fraud, Brazil plans to implement a program to issue identification documents using a private blockchain in November.

A significant increase in crypto adoption has been seen across the country, with BTG Pactual Bank buying BitcoinFriendly brokerage Orama for $99M in January.

Thiago Cesar, Transfero CEO, believes that it is important to ask 6 questions to understand how digital assets are being adopted and if the country’s regulatory framework is guiding the process in the right direction.