Brazil’s CVM advocates tokenization to modernize market supervision

An orientation defended by the regulator

Otto Lobo, president of Brazil’s Comissão de Valores Mobiliários, defends the use of tokenization to modernize the surveillance of the Brazilian financial market, reports Bitcoin.com News. He describes an associated mandatory transition with artificial intelligence tools. This position must not be confused with proof of an obligation already applicable to all assets. The supervisor is still conducting work and experiments on the architectures envisaged. The schedule and scope of a possible generalization belong to distinct stages.

The issue presented concerns the size of the funds sector and the supervisor's capacity to follow operations. A digital infrastructure can organize data more homogeneously and make certain controls faster. It does not dispense with defining responsibilities, access, and applicable rules. The technical modernization of a register and the adoption of a new legal regime do not automatically happen together. The passage from experimentation to generalized use requires treating these two dimensions.

The register at the service of tracking

Tokenizing an asset consists of representing rights in a digital framework. The interest depends notably on the link between this representation and the asset or right concerned. A token does not, by its mere existence, create an enforceable property in all situations. Contracts, intermediaries, and the legal framework determine what the holder can demand. For market surveillance, the identification of beneficiaries and the consistency of recorded information are therefore just as important as the choice of register.

A continuous history can facilitate the reconstruction of operations, but does not guarantee that each introduced data is correct or complete. Supervision must also control the actors informing the system and the procedures linking the register to real operations. AI tools can help spot anomalies in large volumes. Their use does not replace the examination of alerts nor the supervisor's decision. A statistical anomaly does not, on its own, establish an infraction or liability.

Tests before generalization

The CVM tests several distributed ledger technologies in the context of its work on tokenization. The review discusses the analysis of contract logic and cybersecurity risks. These tests serve to examine possibilities and limits before a wider deployment. They do not prove that the entire market has already moved to blockchain. The B3 Stock Exchange's tokenized services project constitutes, on its side, an initiative linked to the development of market infrastructure.

The gains announced on settlement, compliance, or investor access remain to be appreciated in each architecture. Faster settlement can reduce certain risks without eliminating custody, contract, or intermediary risks. Likewise, programming a check in a smart contract does not guarantee its legal exhaustiveness. The Brazilian approach concerns how to organize and supervise markets; its results will depend on the rules adopted, tests performed, and alignment with existing infrastructures.