One question always comes up whenever the subject is tokenization: "is this regulated?". The short answer is that tokenization does not create a new regime, it operates within the rules that already exist. In Brazil, the two that matter most for tokenized assets are CVM Resolutions No. 88 and No. 175.
If you already understand what tokenization is, this text is the next step: where a tokenized issuance fits within the CVM framework.
Does tokenizing change an asset's classification?
Not in itself. Tokenization is the technical representation of the asset and its record; the classification continues to derive from the nature of the instrument and the offering. When a token mirrors a security, it observes the corresponding CVM regulation, it is not a category apart from the rule.
This is the point that separates a serious operation from a shortcut: the goal is not to circumvent the rule, it is to keep the issuance within the applicable regime.
CVM Resolution 88: investment crowdfunding
Res. 88 governs the public offering of securities by smaller companies, conducted by electronic participatory investment platforms registered with the CVM. It is a simplified regime, with disclosure duties proportional to the size of the operation, and a fundraising cap of R$ 40 million per issuer.
In practice, it is the most direct path to structuring a regulated smaller-sized offering without the cost and timeline of a traditional registration.
CVM Resolution 175: investment funds
Res. 175 is the framework for investment funds in Brazil. It consolidates the general rules and rules by asset class and delimits the responsibilities of the essential service providers: administration and management. It is the natural track when an operation exceeds the scope of a simplified offering and requires governance, segregation, and regulated service providers.
Where the infrastructure comes in
In neither of the two regimes does tokenization replace the regulated providers. What it does is give them a rail for issuance, recording, and traceable movement end to end:
- Control over who holds: movement is permissioned, and each transfer only occurs between wallets previously approved through KYC/AML. This relies on a permissioned token standard recognized in the market (the ERC-3643), cited here only as a reference.
- Auditable record: the relational mirror of each position, integrating the off-chain with the on-chain asset.
- Structured backing: the vehicle (e.g., an SPE) and the contracts that sustain the holder's right.
We address this in more depth (block by block, with an FAQ) on the Regulatory page.
The essentials
Well-executed tokenization does not run from the CVM; it fits within Resolutions 88 and 175 according to the size and nature of the operation. The rail changes, the rigor remains.
If you have an operation in mind and want to understand the appropriate classification, describe the instrument and its size: that is the starting point.
Notice
Forward Factory is an infrastructure platform for asset tokenization and does not provide investment advice, recommendations or counseling. The solutions described here do not constitute a public offering of securities. When a token represents a security, it observes the corresponding regulation, and the structuring of issuances adopts know-your-customer and anti-money-laundering (KYC/AML) procedures. Any offerings observe the applicable regulation of the Brazilian Securities and Exchange Commission (CVM), including CVM Resolutions No. 88 and No. 175. Past performance is no guarantee of future results; investments involve risk.