Brazil’s securities regulator, the Comissão de Valores Mobiliários (CVM), has launched a new task force to develop a trial regulatory framework for tokenized securities.

The initiative will focus on addressing key challenges linked to blockchain-based assets, including the maintenance of official ownership records, private key security, transaction reversibility and accountability in the event of technical failures.

The CVM said the framework will examine how securities using distributed ledger technology are registered, held, traded and settled across financial markets.

The working group is required to submit an initial proposal to the CVM’s board within 60 days after its formation. A broader review process will continue for 120 days, with the possibility of an additional 30-day extension if needed.

The group consists of representatives from 14 CVM departments and may seek advice from government institutions, market organizations, self-regulatory entities and external specialists. The regulator said its assessment will also include cybersecurity risks, global regulatory approaches and findings from previous sandbox programs.

Brazil’s securities rules already focus on an asset’s economic features rather than the technology used to create it. In 2022, the CVM clarified that using blockchain does not by itself determine whether a digital asset qualifies as a security.

The new review will instead examine the systems and processes that support tokenized assets.

Distributed ledger technology can combine roles that are traditionally separated among exchanges, custodians, registrars, depositories and settlement providers. This creates complex questions about who maintains the official ownership record, how private keys should be protected, when transactions can be undone and who is responsible if the underlying systems fail.

Brazil’s real-world asset tokenization sector has been gaining momentum. Data from local tracker RWA Monitor indicates that the country’s tokenized asset market has reached around 12 billion reais, or approximately $2.34 billion. Debt products such as debentures and commercial notes represent about $1.3 billion of that figure.

The CVM has already explored blockchain-based issuance and secondary trading through its regulatory sandbox. The new task force will review those experiments as it works toward a wider framework for securities issued, managed and exchanged through distributed ledger networks.