Brazil: CVM publishes sandbox rules and opens doors to the crypto sector

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In Brazil, it has been reported since June 2019 that the Brazilian Securities Commission (CVM) would launch a regulatory sandbox initiative for distributed accounting technology (DLT) to test the scope of this technology in potential business models.

This is a joint initiative involving the Ministry of Economics Special Secretary for Finance, the Brazilian Central Bank, CVM itself and the Superintendency of Private Insurance (Susep).

In the almost a year later, on May 15th of this year, the CVM published the rules of the Sandpit.

Promote innovation

According to the announcement Sandpit has as purpose “Promotion of entrepreneurship and the development of the Brazilian capital market“” Remember, Sandpit It is a security mechanism to have an environment isolated from the rest of the operating system.

The list of rules presented speaks of “innovative business models”. In it, the agency reports in the document that “innovative technology” is one that:

“”[…] develops a product or service that has not yet been offered or with an agreement other than that offered on the stock exchange. “

In addition, the Sandpit also offers international tests. The company can test innovative projects in cooperation with authorities from other countries.

However, the description of the innovation shows that there is an open space for blockchain technologies. Tokenization belongs to one of them. On the other hand, he affirmed that innovation is even a binding criterion. And that among the features you need to participate in, the following is expected:

“Regulated activities have to fit into the concept of an innovative business model.”

Organization of the Sandpit

However, the rules are clear to avoid “mess” in the project. Anyone wishing to participate must state the reason for the official exceptions. On the other hand, the goal of the business model only has to be specified to a limited extent.

In addition, the company’s partners who want to participatecannot be suspended from their position in an institution. Nor can they be considered wasteful or have committed financial crimes.

The agency also announces that it will only grant investment approvals to companies that have been able to do so. It must be demonstrated that there is financial support that goes beyond the possibility of dealing with organizational problems – security is an outstanding feature.

The CVM will also exercise control over proposals that are already running. According to an extract from the document, the company must propose “limits” to be set by the authority.

The limits are given for:

  1. Restrictions on the number of customers;
  2. Maximum operating volume;
  3. Mechanisms for receiving and responding to customer and investor complaints;
  4. Additional transparency measures regarding the communication standards provided in this instruction; and
  5. Limitation of the securities that can be traded; “

These rules come into force on June 1st of this year.


Translated version of items by Gino Matos, published in Cryptofacil.

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