Brazil Will Classify Cryptos As Securities

Bitcoin Cryptos Brazil

✍️ 14 October, 2022 - 10:41 👤 Editor: Jakub Motyka

The Brazilian Securities and Exchange Commission (CVM) has released an opinion paper to clarify how cryptos can be labeled as securities. The draft acknowledged the lack of proper regulations in the digital assets space, broadly defining cryptos as digitally represented assets.

Specifically, the policy termed them as assets safeguarded by cryptographic technology, transacted, and stored in distributed ledgers.

Further, CVM has outlined the requirements for the classification of the digital money. It said that they should reflect a digital version of shares, debentures, subscription bonuses, receipts, right coupons, split certificates, certificates of deposit of securities, and debentures notes.

CVM Classifies Digital Assets In Three Basis

The paper has grouped cryptos into three expansive levels. First, the payments tokens. According to the commission, these are digital assets that function the same as fiat money. Those are presented as a unit of account, a medium of exchange, and a store of value.

The second level is the utility tokens. The guidance opinion document has termed them as assets used on a specific product or service.

Lastly, the third category in the draft is the asset-backed tokens. They can be either real or virtual. Stablecoins and NFTs fall in the criteria as tokens that stand in for other assets.

The guide also states that based on the particulars of each token in the last category, the digital assets are generally described as securities.

The Policy Framework Authorizes CVM As the Crypto Regulator

The draft has mandated the commission to monitor the crypto space keenly based on the new directives. CVM adds that the usual permission or registration is unnecessary for tokenizing assets. The provision, however, requires that the securities follow the set laws.

Cryptos remain largely unregulated in the South American nation. However, the Brazilian Congress is expected to vote on a bill regulating the same. In addition, the central bank of Brazil is also monitoring the feasibility of CBDCs.

Meanwhile, cryptocurrencies are currently on a recovery. This is despite the latest Consumer Price Index report showing a high inflation rate. BTC was trading at $19,625, while ether was at $1,321 at the time of writing.

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Jared Kirui
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