The Brazilian Securities Commission (CVM) has clarified the criteria by which different cryptocurrency assets can be considered securities. Through the issuance of a Guidance Opinion, the CVM defines the different categories of existing cryptocurrency assets, specifies which can be considered securities, and explains how to intervene in these markets.
Brazilian Securities Commission CVM addresses crypto securities classification
The Brazilian Securities Commission (CVM) has released a newguiding opiniondocument that touches on the issue of crypto-based securities. The document acknowledges that there is still a void on the subject due to the lack of specific regulation and defines cryptocurrencies as digitally represented assets that are protected by cryptography and can be traded and stored through distributed ledger technology (DLT).
According to the new criteria, tokens that are considered securities must be digital representations of structures such as shares, bonds, bonds with warrants, rights certificates related to securities, warrant certificates, split certificates, certificates of deposit for securities, and bond certificates.
Similarly, other types of tokens may be considered securities depending on their classification; the CVM further clarified that the tokenization of assets is not subject to prior approval or registration with the Organization, but if the resulting assets are considered securities, they must comply with securities regulations that already exist CVM clarified that the CVM must comply with the securities regulations that already exist.
classification system for cryptocurrency assets
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The document also classifies cryptocurrency assets into three distinct classes: the first is called payment tokens and consists of assets that attempt to replicate the functions of fiat money, including account units, medium of exchange, and value storage.
The second class is called utility tokens and consists of all tokens used to obtain or use a specific product or service. The third class is called “asset-backed tokens” and includes all tokens that are digital representations of tangible or digital assets. This class includes storable coins, security tokens, and non-financial tokens (NFTs).
The CVM clarifies that elements of this last class may be considered securities depending on the specifications of each token in that class. The document states that the CVM will continue to monitor the cryptocurrency market and act in accordance with these new definitions. However, none of these standards are final and are subject to change in the future when regulations on the subject are passed.
Last month, CVM subpoenaed Mercado Bitcoin, a local cryptocurrency exchange, regarding its fixed income token investment offer.
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