BRAZIL Law and Practice Contributed by: Fabio Cendão, Heitor Maia, Eduardo Faria and Gabriel Lobato, Faria, Cendão & Maia Advogados (FCM Law)
errors, disputes, external events and any need for human intervention. 1.1.5 Industry and Trade Bodies In Brazil, there is no single self-regulatory organisation for the blockchain industry in the broad sense. Sec- tor representation occurs through specialised entities, with activity concentrated in specific segments of the technology and its use cases. ABToken is one of the main entities in this context, bringing together participants in the asset tokenisa- tion segment. Its role includes promoting best prac- tices, encouraging innovation, fostering dialogue with regulators and contributing to the development of governance standards applicable to blockchain- based projects. 1.2 Crypto-Assets 1.2.1 Property Considerations Legal Nature Law No 14,478/2022 defines virtual assets as digital representations of value that may be traded or trans- ferred by electronic means and used for payment or investment. Although Brazilian law has not yet con- solidated an autonomous legal category for crypto- assets, they tend to be treated, from a patrimonial perspective, as intangible assets. This classification allows protection of economic rights over the asset, even though its dynamics of control and transfer differ from those applicable to tangible assets. The enforcement of property rights over crypto-assets presents its own challenges. For crypto-assets in gen- eral, there is no public registration system equivalent to real estate registries or other traditional registries. In practice, economic control of the asset is usual- ly associated with control of the private key or with ownership recorded in an account maintained with an exchange or custodian, which creates a relevant distinction between legal ownership, technical control and operational custody. Property Claims Claims to ownership over crypto-assets transferred to third parties on a public blockchain may be difficult to reverse, especially where the assets have already been moved to unidentified wallets or outside custo-
dial environments. Even so, the Brazilian judiciary has advanced in the use of tools for locating and seizing digital assets. CriptoJud, launched by the National Council of Justice, allows communication with crypto- asset brokers for consultation, tracking and blocking of cryptocurrencies and tokens held on exchanges, facilitating attachments in civil and tax enforcement proceedings and interim measures. Transfer of Ownership The transfer of ownership remains more controversial in the case of tokens representing movable assets, real estate or other assets subject to specific formali- ties. In these cases, an on-chain transfer does not, by itself, replace the legal acts required for transfer of the underlying asset, such as public registries, anno- tations or formal instruments. For this reason, many tokenisation projects adopt structures in which the token represents economic or contractual rights over the asset, rather than necessarily direct legal owner- The use of digital assets in security arrangements is legally possible, but still lacks specific regulation. In principle, the structure may be analogous to security over rights or other intangible assets, but uncertainties remain regarding formalisation, publicity, priority, cus- tody, enforcement and realisation of the asset value in the event of default. A more concrete regulatory exception appears in margin account transactions carried out by VASPs, in which virtual assets may be pledged in favour of the creditor institution within a specific regime limited to this type of transaction. 1.2.2 Access to Banking ship of the asset. Use as Security Brazilian regulation does not impose a formal restric- tion on the choice of banking or payment partners by crypto-asset companies. Even so, VASPs must maintain an operational structure compatible with the regulated financial system, which, in practice, tends to require stable relationships with financial institu- tions, payment institutions and other regulated service providers. Access to banking services in Brazil is also not pro- hibited for crypto-asset companies. The main chal- lenge is operational and reputational: more conserva-
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