Brazilian CVM to launch cryptocurrency regulatory sandbox

The Brazilian Securities and Exchange Commission (CVM) has announced the launch of a new regulatory sandbox containing specific guidelines for cryptocurrency and digital token issuance.

The news comes after the country’s regulator stated at the end of last year that the implementation of blockchain technology is a top priority for 2020.

Brazilian CVM regulatory sandbox

The CVM’s regulatory sandbox acts as a testing environment for fintech and other companies to issue tokens or cryptocurrencies within a regulated environment.

According to the regulator’s website, the initiative is “a response to the changes that are happening in the capital market that have driven the emergence of new business models with technologies such as DLT and blockchain”.

In addition to the sandbox, the CVM also announced other initiatives such as the regulation of the Economic Freedom Act and the revision of instructions on distance voting.

CVM fostering blockchain adoption in Brazil

The CVM is looking to further the adoption of blockchain technology in Brazil, and the regulator claims it is already researching the potential implementation of what is being called an “open broker”.

Essentially, the CVM intends to test new technologies that will allow the sharing of customer data between all brokers registered with the federal agency.

The idea is similar to open banking, which should be launched in 2020 by the Central Bank of Brazil. This new framework will allow the sharing of data, functions, and resources offered by banks with fintech partners.

The proposal put forward by the CVM will help investors by creating blockchain accounts distributed by the participating peers. A single identity could therefore be shared among brokers and fintechs quickly and efficiently.

The CVM also wants to deploy better registration portability similar to telephone operators. Under the proposed system, users who do not wish to proceed with the services provided by a certain entity could ‘migrate’ their registration to another operator.

This means users will enjoy better privacy and enhanced security of data ownership.

With the adoption of better regulatory frameworks, we could see cryptocurrency and blockchain adoption taking off in Brazil in 2020.