In Brazil, regulatory and government authorities plan to run an organizational sandbox model to improve the security of capital markets, driven by business models that leverage DLT and Blockchain technology.
The Finance Ministry of the Ministry of Economy, the Central Bank of Brazil, the Securities Commission (CVM) and the Superintendency of Private Insurance announced their plans to implement this model of security in Brazil through an official statement published on the website of the CVM on June 13.
The authorities mentioned in the statement that “the use of innovative technologies, such as Distributed ledger technology (DLT), blockchain, and artificial intelligence, has allowed the emergence of new business models, reflecting on the offer of products and services higher quality and scope, “the statement said.
According to the announcement, the construction of sandboxes with digital tokens in Brazil, developed in blockchain, will be allowed, but it does not offer many details.
According to Antonio Berwanger, Superintendent of Market Development of the municipality, in an interview with the portal CriptoFácil, “if a tokenization environment is within the markets regulated by the CVM, can be considered a good candidate for this initiative,” said Berwanger.
“If you intend to create a platform, through a smart contract, that will allow a third party to use the platform to issue a security that has, well, that can be an interesting example that we can analyze in the sandbox environment,” he said.
The Sandbox is an isolated test environment used in software development so that users can run programs or run files without affecting the application, system, or platform on which they run.
The statement also highlights that the current scenario “imposes on regulators the challenge of acting with the necessary flexibility, within limits allowed by legislation, to adapt their regulations to technological changes and constant innovations. So that regulated activities comply with the rules of each segment, regardless of how services and products are supplied, especially under the prospects of legal certainty, client and investor protection, and the safety, hygiene, and efficiency of markets.”
“Regulators who subscribe to this release will coordinate their institutional activities to monitor the functioning of the essential elements of the litter box in their respective areas of competence, including elements common to models observed in other jurisdictions.” These elements could be the granting of permits temporary and exceptional and justified exemption, compliance with the rules for specific regulated activities, observation criteria, limits and periods previously established, and regulators will try to act together when the activities cross more than one regulated market.
The CVM concludes by stating that “the implementation of this regulatory regime is expected to be able to promote the development of more inclusive and higher-quality products and services and can foster constant innovation in financial, security and capital markets.”