Sandbox may accelerate tokenization of securities.

The Brazilian Securities and Exchange Commission (CVM) announced this Thursday (30) that it authorized three projects for testing in its regulatory sandbox, two of which on tokenization. Among the participants is the Interbank Payments Chamber (CIP), which carries out blockchain-related studies for the Brazilian Federation of Banks (Febraban).

This means that learning from the CVM in this process can contribute to the tokenization of securitites in Brazil. Many companies are currently developing projects abroad due to the lack of a safer regulatory environment in the country for these activities.

One of the projects that CVM chose for its sandbox is from the group that includes the crowdfunding platform Beegin, CIP and FlowBTC, the group’s tokenization Finchain, which also has the PandaPay cryptocurrency digital wallet. The other group linked to tokens is Vórtx Distribuidora de Títulos e Valores Mobiliários Ltda. and Vórtx QR Tokenizadora Ltd.

Both cases involve the issuance, public distribution and trading, on an organized over-the-counter market, of securities issued or represented in tokens on blockchain networks, the CVM said.

The focus of Beegin, CIP and Finchain’s sandbox project is on securities of small and medium-sized companies, says the CVM. Vórtx’s is in debentures and shares of closed-end funds.

The third choice is Basement Capture and Registration Solutions. The latter will have temporary authorization to be a securities registrar for limited liability companies that have carried out or are in the process of carrying out public offerings. The focus is on small businesses.

According to the CVM, authorizations for testing the sandbox come into effect between December this year and March 2022. This was an agreement with each group “to accommodate operational and commercial preparation stages”.

In total, the CVM received 33 proposals. Excluding the three approved, 26 were considered unsuitable, four were refused. Of these, two for not justifying the need to operate in a regime different from the ordinary one and two for lack of convenience and opportunity.

“All authorized companies will still need to submit final versions of documents related to the operational functioning of their business models to the Sandbox Committee. The effective start of operations is subject to the approval of such documents”, says the statement from the market regulator.

The business models to be tested by the first group of the regulatory sandbox represent a relevant opportunity to foster innovation in the capital market, both in terms of the use of new technologies and in relation to the adoption of new regulatory approaches by the CVM”, said the president of CVM, Marcelo Barbosa.