Brazil: Issued Guidance Opinion on Cryptocurrency Assets and the Securities Market

On 11 October 2022, the Brazilian Securities and Exchange Commission (CVM) published Guidance Opinion No 40 on Cryptocurrency assets and the Securities Market. In the guidelines, the CVM defines cryptocurrencies as digitally represented assets protected by cryptography technologies that can be transacted and stored through distributed ledger technologies. The CVM also classifies cryptocurrency into three types, payment tokens, utility tokens and asset-backed tokens. Furthermore, the CVM outlines the criteria that cryptocurrencies have to meet to be classified as securities and the requirements they have to follow if classified as such. In particular, the CVM notes that providers of utility tokens are not required to obtain approval to operate or register, but if the providers issue securities for public distribution, they will be required to follow the regulations. Finally, it was noted that the new technologies used for token trading, including for bookkeeping, centralised deposit, registration and settlement of securities transactions, will be considered securities.