In a previous text, when commenting on the bill aimed at disciplining what is called “virtual currencies” (PL No. 2,303, of 2015), I tried to discuss basic concepts about assets of this nature and outline perspectives for their use and regulation, pointing out the inaccuracies and insufficiencies that he identified in the project.
Maybe it’s worth getting back to the topic.
The generic use, for that reason imprecise, of the concept of virtual asset does not help to understand the phenomenon of the progressive use of technological resources to carry out commercial and financial operations, the formalization regime of the respective economic-legal relations and the constitution of connected documents or deeds of credit. And, consequently, the understanding of the rules applicable to them.
The increasing process of carrying out and formalizing in person (through technological resources) commercial and financial operations (lato sensu, credit operations in production chains or direct credit granting between borrowers and lenders, whether financial institutions), ended up reducing the production of physical documents to a minimum. Hence the evolution (and growing importance) of processes for certifying the identity of people and the businesses they carry out, and their control and disclosure through digital, technological mechanisms.
These digital mechanisms, when representative of credit relationships, can be called digital assets, if the practice of the agents involved in their negotiation and settlement recognizes them as such. Just think about the purchase and sale relationships carried out through the Internet and the generation of payment slips and the processing of your payment through financial institutions (or similar institutions). Or in the electronic linking of “virtual duplicates” to commercial operations between economic agents of production and circulation of goods and products, “duplicates” and commercial credit relationships, which in most cases are not even represented in a physical document, to that produce effects.
Hence the importance of understanding that not every digital asset (electronic, virtual, technologically registered or characterized by an equivalent expression), although recognized as valid and binding by the parties involved, corresponds to a book-entry or crypto active asset.
In the first case, because, necessarily regulated by special legislation, book-entry assets constitute a type of assets created and controlled (in terms of uniqueness, ownership, transfer or restriction on transfer under any title and performance process) by entities authorized to provide this type of service , with the objective that transactions carried out between specific parties may be the object of legal relationships involving third parties, in a context of legal certainty for the financial and capital markets. In the second case, that of crypto actives, because, although digital, they correspond to assets created using specific technology, of distributed registration (“DLT – distributed ledger technology”) and cryptographic in nature.
As can be seen, book-entry and crypto active assets configure unique kinds of dematerialized assets controlled by digital processes.
This distinction is quite relevant in regulatory terms, it bears repeating.
The provision of bookkeeping services for financial assets or securities is a regulated activity, reserved, for that reason, to entities authorized by the Central Bank of Brazil or by the Brazilian Securities and Exchange Commission. And the incorporation of cryptoactive assets into the financial and capital markets requires specific authorization, as a rule, for each of the asset classes to The provision of bookkeeping services for financial assets or securities is a regulated activity, reserved, for that reason, to entities authorized by the Central Bank of Brazil or by the Brazilian Securities and Exchange Commission. And the incorporation of cryptoactive assets into the financial and capital markets requires specific authorization, as a rule, for each of the asset classes to which they relate (financial assets or securities that are the object of the encryption process).
The other digital assets (thus understood, those that, without being book-entry or cryptoactive, concern legal-economic relations established or represented by almost exclusively technological procedures) are the product of the advance of information technology and communication resources that allow the characterization of legal-economic relations without the formalization of physical documents, at least in ordinary situations.
Reference is made to ordinary situations (those in which the credit obligations inherent to virtual assets are fulfilled as contracted), to remember that, especially in cases of default or questioning of rights between the parties involved, it is often necessary that the digital controls are translated into documents capable of enabling their execution, in the form of a credit instrument or a contract. Previously, when commenting on the bill aimed at disciplining what is called “virtual currencies” (PL No. 2,303, of 2015), I tried to discuss basic concepts about assets of this nature and outline perspectives for their use and regulation, pointing out the inaccuracies and insufficiencies identified in the project. Maybe it’s worth getting back to the topic. The generic use, for that reason imprecise, of the concept of virtual asset does not help to understand the phenomenon of the progressive use of technological resources to carry out commercial and financial operations, the formalization regime of the respective economic-legal relations and the constitution of correspondents documents or deeds of credit. And, consequently, the understanding of the rules applicable to them.
The increasing process of carrying out and formalizing in person (through technological resources) commercial and financial operations (lato sensu, credit operations in production chains or direct credit granting between borrowers and lenders, whether or not financial institutions), ended up reducing the production of physical documents to a minimum. Hence the evolution (and growing importance) of processes for certifying the identity of people and the businesses they carry out, and their control and disclosure through digital, technological mechanisms.
These digital mechanisms, when representative of credit relationships, can be called digital assets, if the practice of the agents involved in their negotiation and settlement recognizes them as such. Just think about the purchase and sale relationships carried out through the Internet and the generation of payment slips and the processing of your payment through financial institutions (or similar institutions). Or in the electronic link
Still on the subject, it seems important to establish that the notion of cryptoactives should not be confused (also as a rule) with that of the technology that represents it, since the technological resource to which blockchains correspond can be used for many kinds of legal relationships, not just to serve as a document (technological representation, token) of an asset or set of assets, or a credit relationship.
In other words, the process that came to be called “tokenization” does not apply only to the creation of cryptoactives, it can (and perhaps should) be incorporated into the economic and legal processes for the formation of commercial, financial and credit relationships.
This process (which seems irreversible, and which should evolve rapidly), although it should force regulators to rethink the attributions of some of the existing market infrastructure entities (especially bookkeepers and registrars), should introduce into the financial system new kinds of infrastructure entities, mainly aimed at verifying/supervising/certifying the adequate governance of the processes of creation and circulation of rights via tokens, or the tokens themselves.
It is the intuition that remains, given that, if it is a fact that the use of the blockchain resource can reduce the need for bookkeeping and cryptoactive registration processes, since the token itself can contain all relevant records and allow its instant verification, it is no less true that it is necessary to assign to certain entities (which cannot, in principle, be confused with those that create this kind of technological mechanism, because they are not regulated) the attribution to verify the adequacy and legitimacy of the entries made therein, for the security of the interested parties and the functioning of the market.
It was what seemed necessary to add at this point on the subject.
