With the publication of Guidance Opinion No. 40 of October 11, 2022, the Brazilian Securities and Exchange Commission (CVM) consolidated its understanding and guidelines about the definition and regulation of cryptoactive assets in Brazil and their relationship with the securities market.

The entity reaffirmed that these assets, as a rule, are not subject to the specific regulatory regime of the securities market. However, this regime and its legislation (Law No. 6385/1976) may apply depending on the nature, characteristics, services, or purposes of the cryptoactive assets.

In the Opinion, CVM adopted the following functional criteria for the taxonomy of tokens:

  1. Payment Token (or crypto currency): seeks to replicate the functions of currency, notably as a unit of account, medium of exchange, and store of value;
  2. Utility Token: used to acquire or access certain products or services; and
  3. Asset-backed Token: represents one or more assets, tangible or intangible. Examples are security tokens, stablecoins, non-fungible tokens (NFTs), and other assets subject to tokenization operations.

Following the position already adopted in the international market, CVM stated that such classification is not exhaustive and the same asset may fall into one or more categories, depending on the functions it performs and the rights associated with it in the particular case.

Furthermore, considering that such assets are usually offered via the Internet and without geographical restrictions, their analysis must consider Guidance Directives 32/2005 and 33/2005 about the Internet’s use in (i) securities offerings and (ii) the intermediation of operations and offering of securities issued and admitted for trading in other jurisdictions, respectively.

The Opinion also highlighted the need to adopt a disclosure and transparency enhancement regime concerning securities represented by cryptoactive. For the CVM, the disclosure system is not an end but a tool to ensure that investors have sufficient elements to decide on the acquisition, maintenance, or disposal of securities.

In this sense, CVM listed, in its Opinion, a minimum set of information related to the securities that must be included in the documents foreseen in the rules required for the offering and trading of tokens.

CVM disclosed that it has already tested the cryptoactive operation as a security and will continue to deepen its analysis and application in the capital market. Also, if necessary, it may regulate it within the limits of its competence and consider its experience in the Regulatory Sandbox context, whose first admission process had approved 4 (four) proposals involving the issuance and trading of digitally represented securities.

For more information about CVM pronouncements on the subject over the past few years, click on our Special Blockchain Descomplicada Newsletter.

The Blockchain Desk of Fraga, Bekierman e Cristiano Advogados is available to clarify any questions on the subject.