CVM Tokenization Proposal Sparks Market Concerns Over Costs and Reach

The Brazilian Securities and Exchange Commission (CVM) has proposed an overhaul of Resolution 88, which governs tokenized credit offerings through crowdfunding. Experts and industry participants are concerned that the new rules could raise transaction costs and shrink the market's reach.

According to Rodrigo Carvalho, a partner at CBA Advogados, the reform stems from both success and contradiction. The CVM brought tokenized securitization into the crowdfunding framework through official guidance, but now needs to establish rules for a market that has grown beyond its original vision.

The proposal would raise the maximum offering size from R$15 million to as much as R$120 million, but introduces new obligations for crowdfunding platforms. One measure contested by the market is the requirement to appoint a trustee, which industry associations estimate could drive up issuance costs.

Vanessa Butalla, vice president for legal, compliance, and regulation at Mercado Bitcoin (MB) and chair of the Brazilian Tokenization and Blockchain Association (ABToken), said the industry's main concern is that the crowdfunding framework could end up too closely aligned with the traditional securitization regime.

The CVM said the proposal is intended to modernize and improve the investment crowdfunding framework by keeping pace with market developments and expanding access to Brazil's capital markets, while preserving the principles of proportionality, transparency, and investor protection.