The Brazilian Cryptoeconomics Association (ABcrypto) expanded the scope of the codes and launched its tokenization self-regulation, marking an important advance for the sector, in line with CVM opinions and international good practices.

The new self-regulation will be published in September, after formal approval by the Board of Directors of ABcripto, with a validity of three extendable months.The objective is to establish clear and robust standards for the issuance and trading of tokens, providing greater transparency, security and trust for the entire market.

The tokenization market in Brazil is in a period of significant growth, reflecting global trends. According to the study “Cryptoeconomics in Brazil 2023”, conducted by ABcrypto, 27% of the companies have businesses related to tokenization.

“A ABcrypto tokenization self-regulation comes at a crucial time of growth and expansion of the sector, formalizing practices, bringing greater transparency and organization.The document maintains ethical standards, institutionalizes practices and standardizes procedures.We have established a new milestone and take another step towards the development and security of the” sector, explains Bernardo Srur, chief executive officer of ABcrypto.

For Renata Mancini, Vice President of the Board of Directors of ABcripto, “ guiding principles of self-regulation aim to ensure an efficient token market, putting on the agenda equity, transparency and trust, in addition to promoting ethical action that harmonizes with the legislation and good practices in force”.

The launch of Tokenization self-regulation reinforces the pioneering spirit of the association, which was the first to launch crypto self-regulation in 2020, and has played an important role in discussions for the creation of the Cryptocurrency Legal Framework (Law 14,478/22).

“A self-regulation stipulates guidelines associated with transparency and consumer protection, bringing more legal certainty for the investor, for conducting business, as well as for the Brazilian financial system”, adds Edisio Neto, President of the Board of Directors of ABcripto.

For Erik Oioli, managing partner of VBSO Advogados, “a self-regulation for tokenization is a sign of the maturation of this industry and prepares it to grow even more in the context of a digital economy, creating standards and rules that increase transparency and security for the entire” market.

The document is the result of a collaborative work of ABcripto, through its Self-Regulation Committee, coordinated by Matheus Cangussu, Legal Director of Loopipay; Rita Casolato, Compliance Director of LIQI; in addition to the Tokenization working group, led by Larissa Moreira, Digital Assets Manager of Itau; and Erik Oioli, partner-director of capital markets of VBSO Advogados.

The self-regulation of tokenization was presented during the workshop “Token 5 The Future of Digital Transactions”, held last Thursday (08). The event was attended by big names in the sector, such as Matheus Cangussu, Coordinator of the ABcrypto Self-Regulatory Committee; Larissa Moreira, Tokenization GT Leader of ABcrypto and Digital Assets Manager of Itauco; Victor Yen, Director of Striked Finance of LIQI; Yuri Nabeshima, Workshop Coordinator of the Legislature Group between ABcrypto and ABCovia Tokustoli tokenization

“O code brings standardized definitions of tokenization concepts. We want to establish tokenization guidelines to promote a safe and transparent environment for investors and the market. The ABcrypto code is anchored in principles that can be adaptable to technological and legal developments”, concludes Henrique Vicentim Lisboa, Capital Markets partner of VBSO Advogados and member of the Self-regulation Working Group.

More information on tokenization self-regulation is available in the document here link.

In a world increasingly oriented by technology, the dissemination of Artificial Intelligence (AI) is already a reality. Therefore, its regulation has been the focus of international attention and several countries, including Brazil, try to advance in this direction. Here, several points of divergence have contributed to the vote on the bill (PL) 2.338/2023 be postponed and recently the Court of Accounts of the Union (TCU) identified several risks related to such regulations that are under way in the National Congress.

The work of the TCU put into perspective the Brazilian Strategy of Artificial Intelligence (Ebia), addressing and analyzing how this would harm the implementation of it, as well as the possible impacts resulting from the eventual approval of these proposals, on the public and private sectors.Initiated via ordinance of the Ministry of Science, Technology and Innovation (MCTI), Ebia assumes the role of guiding the Brazilian State in favor of initiatives, in its various aspects, that stimulate the development of solutions in Artificial Intelligence, as well as its conscious and ethical use.

For the professor at the University of Brasilia (UnB) and researcher in the area of technological innovation applied to health, Dr. Paulo Henrique de Souza Bermejo, it is necessary to take into account especially if Brazilian regulation can restrict innovation, going against Ebia. It is worth mentioning that Ebia has six main objectives: to contribute to the elaboration of ethical principles for the development and use of responsible AI; to promote sustainable investments in research and development in AI; to remove barriers to innovation in AI; to train and train professionals for the AI ecosystem; to stimulate innovation and Brazilian AI in an international environment; and to promote cooperation between public and private entities, industry and research centers for the advancement of Artificial Intelligence.

Paulo pointed out that excessive regulation can overload and increase the evolution of AI systems in the country, so that it would entail excessive spending of time and money for companies to comply with complex regulatory rules, instead of spending resources on improving technology. This would foster the monopoly of a few companies financially able to create systems regularly, to maintain themselves in accordance with the possible published standards. Thus, startups and smaller companies would not have a way to cope with this, risking the goals of Ebia itself. “All this scenario can result in the loss of international competitiveness of several productive sectors, so it is so important to find a balance between AI and responsible innovation to ensure that it is used and innovation.

He explained that one of the most essential aspects of the area in Brazil is to be able to situate the country as an international competitor, both in the development of AIs and in the application in the productive sector.“The amount of investment and the regulation proposed in each country will directly influence the positioning in relation to other countries. This means that the national industry can have more autonomy, evolving its own technology and aiming at export, or being more dependent on the import of technology from other countries. In a globalized market, Brazilian companies need to have the ability to compete with foreign ones, following the technological evolution to make the production process more efficient”, he explained.

The professor also pointed out that the regulation distinguishes AI systems from other systems. “A my view, this in the medium and long term, will apply to virtually all types of software, given that less intelligent software systems will tend to fall out of use and be replaced more quickly by others. In other words, this will possibly cause the application of a series of restrictions to all types of software, including those made abroad. That is, it should impact the national software industry and also Brazilian society in its entirety, as it may delay the insertion of new technologies in the country, which will make the national productive system, related to various sectors of the economy, more efficient and competitive, emphasized.

Another aspect to be considered concerns the restrictions on experimentation, since academic research in AI usually includes experiments with new methods and algorithms.“Restrictive regulations may limit the freedom of researchers to test other approaches, which may hinder the discovery of new solutions.In addition, they can hinder collaboration between researchers, whether from different institutions or countries. This can happen, for example, if regulations deny the sharing of data sets fundamental to the advancement of AI, limiting the ability to create more efficient algorithms”, he endorsed.  

The need for flexible regulation

The researcher pointed out as ideal, an AI regulation in Brazil that was flexible, following the understanding of society in terms of technology. “As there are so many factors involved, it is best not to rush regulation in Brazil, but to deepen the debate and include all those involved, such as the government, private sector, civil society and academia, in the decision-making process. Regulation is very necessary, but must be done with caution, so that it contemplates all angles of the current circumstances. Even because as there is a speed in the evolution of these technologies, daily new situations still not foreseen in the current laws, nor in some of the law projects that are necessarily under discussion and the subject matter in discussion is under discussion.

In another aspect of this context, according to Paulo, it is important to keep in mind that AI applications cover various sectors of the economy, so that each of them would require specific regulations, being more reasonable to adopt different governance measures, as an example of what occurs in the USA.

Copyright and data mining

For the teacher, a regulation that goes beyond the reasonable can hinder not only the potential, but also the ability of an entire community to advance and prosper. Given this, one of the points discussed is how to balance the protection of individual and collective rights without hindering the progress of technology, especially in relation to data mining.

According to Paulo, the availability and data mining are crucial for the development of AIs, especially for machine learning models, which require the exploitation of large volumes of data. One example of this lies in the field of large language models, such as GPT-3 and 4, bases for ChatGPT, which are trained in vast amounts of internet texts, learning to generate human-like content, understand instructions, among others.

The issue that is outlined, then, as he reported, is about copyright on this data used for training. “A disproportionate decision in regulation may prevent the development and use of AI systems that require the exploitation of large volumes of data, involving text, audio and images. This would create even more obstacles for the national market”, he argued.

In another view of this context, the expert pointed out that the issue of copyright has been widely debated in the world, with these technologies receiving numerous criticisms. For Professor Bermejo, it is necessary that there is a consensus, in order for the large manufacturers of these technological instruments to reach an agreement with content creators, in case of violation of intellectual property.

Finally, according to the expert, the training of language models in Portuguese is a key point, because although commercial models such as Gemini and ChatGPT “falem”, this often occurs through translations, so that it can result in biased and incorrect answers.On the other hand, Brazilians also produce a large volume of data, which are targeted by foreign “ techs, capable of training large artificial intelligence models, so they would be profitable alternatives within this market, with an AI that was genuinely Brazilian.