Toke Invest, which received a stop order from the CVM, wants to return with a “soft” blockchain

Toke Invest Securitizadora, which last April received an order from the Securities and Exchange Commission (CVM) to cancel sales of tokens based on a real estate development in Alagoas, halted sales and refunded the amounts to customers as soon as it learned of the information. And while it waits to know if and how the regulator will proceed with the process, it wants to issue financial securities – its specialty – with ownership registration on blockchain – as long as authorized by the regulator. That’s what the company’s CEO, Rafael Felcar, told Blocknews.

“The risk was known to be in an unregulated environment and is (cited) in the (project) white paper. We act on the basis of legal opinions,” said Felcar. Last year, Toke Invest told Blocknews that it relied on real estate industry regulations and did not need CVM authorization to sell its products.

The Commission ordered the sale of tokens worth a total of around BRL 12 million to stop. They referred to the acquisition by investors of fractions of land in São Miguel dos Milagres (AL). A hotel complex would be built on it. The regulator classified the tokens as financial rather than real estate. Thus, they would need a registration request or waiver for the public offering.

Felcar said he learned of the order the same day it was released, on April 12, that he was abroad and that he had no prior notice. According to the CEO of Toke Invest, sales stopped immediately and the company refunded around BRL 150,000 to buyers. Sales were still in their infancy. The company had access to the decision after around 25 days, within the regular period.

CVM order did not reach the first issue of Toke Invest

This was his second such issue by the company. Thefore, the first managed to do. The project was carried out together with the incorporated REV3 for the construction of a condominium in the city of Sumaré (SP). According to Felcar, the entire sale has already taken place and was not affected by the CVM’s order. In both cases, the company focused on selling tokens in the range of BRL 100, therefore, at retail.

The CEO states that the company has already issued a BRL 3.5 million and BRL 1.2 million issuance in private offerings with blockchain registration for professional investors, those who have investments from BRL 10 million. “But to make a retail offer, there has to be registration”. This is because it has to follow CVM Instruction 400, which regulates the offer to investors in general.

Toke Invest – and Felcar – is registered with the CVM in category B, that is, it can trade on regulated markets everything that is not shares, share deposit certificates or securities “that convert or grant the right to acquire shares or share deposit certificates”, says the instruction of the autarchy. And always asking for permission.

Now, Toke Invest says it will work with financial securities – certificates, collective agreements and debentures, for example – with blockchain ownership control. Felcar calls this a “soft” use of technology. “The company has at least R$ 150 million in the pipeline to be packaged in this way”, according to the CEO.

Entrepreneurs await rules for real estate tokens

These assets, says Felcar, “will be fractional shares or bonds with prices starting at R$100”, according to Felcar. This is because the company still wants to operate in retail. “We are a securitization company and we are authorized to issue financial services. Now, let’s launch as a financial product. We intend to keep our business environment in a regulated environment,” he added.

Along with Felcar, there are another series of entrepreneurs with a project with real estate tokens under their arm just waiting for regulation to put them on the market. The person who posted it says that it has studied legal and market aspects to make sure it does not violate the CVM’s rules on the sale of financial assets. The line between infringing or not can be fine.

Toke Invest also expects regulatory advances and says that in a way, it is ready to pivot the business once they happen. “There is an important regulatory trend happening” that could open more doors for real estate-backed financial tokens.

New MP addresses the securitization framework

According to him, there are factors that can help his initial project and, thus, would allow him to pivot his business quickly. Some of these rules could come from Provisional Measure No. 1103, of 2022, which deals with the new legal framework for securitization and is under discussion in Congress, which deals with what could be securitized. In addition, it cites one of the amendments that the Brazilian Association of Financial and Capital Market Entities (Anbima) suggested to the MP. In this case, that on “allowing assets to be registered with an authorized entity or otherwise arising from security protocol technology or decentralized distribution (blockchain).

For the company’s CEO, the fact that it is a capital market issuer made it adopt a governance structure that includes equity audited by CVM auditors. In addition, it publishes quarterly financial statements related to the assets linked to the tokens, “what the capital market uses”. And as a securitizer, they have experience in managing assets that are the backing of the securities it issues.