CVM advises on cryptocurrencies, tokens and NFTs

The Securities and Exchange Commission (CVM) released its Guidance Opinion 40 on Tuesday night (11), which consolidates the municipality’s understanding of the rules for “cryptoassets” (cryptocurrencies, tokens and NFTs). that are considered securities.

The document outlines how the regulator will act and outlines possible ways to inspect and sanction digital asset issuers.

While there is still no specific legislation on the subject, the document says, the advice has aim to guarantee more safety and to create a favorable environment for the development of ‘cryptoactive substances’.

For example, the CVM says in the document that it contributes to: protecting investors, countering money laundering and corruption, controlling tax evasion and countering the financing of terrorism.

Guidance Advice 40

The opinion of the CVM explains that the initial approach regarding crypto assets that are considered securities will be in accordance with the principle of wide and adequate distribution.

“The municipality will initially focus on increasing transparency regarding crypto assets and valuing the disclosure regime, without prejudice to the assessment of the need to subsequently supplement the performance of the CVM with other measures that follow this approach. can be combined.”

According to the document, the tokenization itself is not subject to prior approval or registration with the CVM. Issuers and the public offering of such tokens, however, they will be subject to regulation.

The CVM understands that a token that references an asset may or may not be a security. Thus, the municipality will adopt an approach for classifying tokens in some categories, they are:

• Payment Token (cryptocurrency or payment token): tries to imitate the functions of currency, especially as a unit of account, medium of exchange and store of value;
• Utility Token (utility token): used to buy or access certain products or services; and
• Token with reference to Asset (asset-backed token): represents one or more assets, tangible or intangible. Examples are the “security tokens”Bee stable coinsyou non-fungible tokens (NFTs) and other assets subject to “tokenization” operations.

The categories are not exclusive, so a single crypto asset can fall into one or more categories.

The CVM colleague will consider the following features of a collective investment agreement to decide whether or not a particular crypto asset is a security:

• Investment: cash or asset contribution amenable to economic evaluation;
• formalization: security or contract arising from the relationship between investor and
  provider, regardless of its legal form or specific form;
• Collective nature of the investment;
• Expected economic benefit: or by entitlement to any form of participation, partnership or compensation, as a result of the success of the activity referred to in the following point;
• Entrepreneur or third party: economic benefit comes from the
  predominant performance of a third party other than the investor; and
• Public offer: popular savings fundraiser.

CVM looks at cryptocurrencies

Recently, the CVM called on Mercado Bitcoin, the largest cryptocurrency exchange in Brazil, to clarify its financial products launched in the form of tokens.

With the publication of the new advice, the CMV makes it clear that it pays attention to the crypto asset market and the measures to prevent and sanction possible violations of the laws and regulations of the Brazilian securities market.

According to the municipality, this includes issuing suspension notifications (stop orders), instituting proceedings and even communicating with the federal and state prosecutors and the federal police about the existence of possible crimes.