Brazil To Implement Multi-Sectoral Regulations In Reaction To Digital Revolution


Various government agencies and financial regulators in Brazil have teamed to come up with a regulatory sandbox model that will target emerging technologies like blockchain and fintech, Cointelegraph reports.

In recent past, the financial market in Brazil has come to deal with new and innovative entrants, as a result of the growing adoption of technology by the market. The country has witnessed an explosion in fintechs which are already financial institutions regulated by the Central Bank of Brazil, to numerous solutions in blockchain and cryptocurrencies. However, with adoption and regulation still emerging in the country, regulators have now joined hands to come up with new policies to protect investors and the market from the risks that come with these new technologies without impeding their advancement.

In other words, the brazilian regulatory framework is being adjusted to include the new players in the financial market.

The new regulatory move is a result of collaboration among the Central Bank of Brazil, the Securities and Exchange Commission (CVM), the Superintendence of Private Insurance (SUSEP), and the Ministry of Economy’s Special Secretariat for Finance. The regulations will help the country to adapt to the emerging digital transformation that is affecting various sectors such as financial, insurance and capital in Brazil.

CVM announced that the multi-agency team has the intention to implement a regulatory sandbox model in Brazil.

Response To Emerging Technologies

According to the authority, the initiative comes as a response to the numerous transformations that are taking shape in the capital market which has led to the emergence of fresh business models led by technologies such as Distributed Ledger Technologies (DLT) and blockchain. CVM explained in a statement:

“The use of innovative technologies, such as distributed ledger technology – DLT, blockchain, roboadvisors and artificial intelligence, has allowed the emergence of new business models, with reflections on the offer of products and services of higher quality and scope,” the statement said.”

The temporary regulations will allow the accomplishment of adequacy tests to determine the impact that the regulation will bring to a given solution, in a model that has been dubbed internationally as sandbox regulatory.

Antonio Berwanger, Superintendent of Market Development of the municipality explained the initiative in details:

“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 he owns, well, that can be an interesting example that we can analyze in the environment of the  sandbox.”

CVM says that it expects the implementation of the new regulatory framework to help in the promotion of more inclusive and higher quality products and services that can spur innovation in financial, capital and security markets.

The new initiative is relevant as it reduces the lack of transparency that regulators face when they are dealing with new technological based solutions that, due to their innovative nature, make it difficult to predict their impact and the potential risks to the hygiene of the financial sector.

Do you think the new initiative by CVM will encourage growth of blockchain based solutions in Brazil? Share your thoughts with us in the comments section.

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