Debt tokenization is emerging as one of the most relevant innovations in the contemporary financial market. Using distributed ledger technologies (DLT) and blockchain, credits that were previously formalized through contracts or securities are now digitally represented by "tokens," which reflect these credit rights and can be traded in structured technological environments.

But what exactly changes when a credit is digitally represented? Are we facing a new type of asset or just a new way of registering and trading rights that already exist?

In Brazil, the debate gained new momentum with initiatives from ANBIMA aimed at modernizing the sector's rules and developing testing environments for tokenization, including pilot projects and proposals to improve the regulations applicable to virtual assets.

Concept and Structure of Debt Tokenization

Tokenization consists of the digital representation of an asset, in this case a credit, through a record on the blockchain. Each token can correspond to a fraction or the entirety of a given credit.

To understand this structure, it's important to distinguish two elements of the operation. On one side is the asset that gives rise to the operation, that is, the credit itself. On the other, the token that represents it digitally.

• The creditThis refers to the right to receive a specific amount of money, which continues to be governed by applicable civil and business rules (e.g., loan, debenture, commercial note, trade receivable, or structured credit transactions).
• The tokenThis is the digital representation of that right, which can receive different classifications depending on how the operation is structured, and can be treated as a security, collective investment, financial asset, or simply as a digital form of credit transfer.

If credit remains essentially the same, to what extent does tokenization change its economic and operational dynamics?

Tokenization, therefore, does not create a new type of credit, but a new way of registering and transferring that right.

Regulatory Framework and Virtual Assets

In Brazil, the general rules regarding virtual assets were established by Law No. 14,478/2022. This law defined guidelines for the sector and assigned the supervision of service providers related to virtual assets to the Central Bank of Brazil, while preserving the competence of the Securities and Exchange Commission when the asset is considered a security.

In this context, an important question arises: When does a token representing a credit become classified as a security?

Depending on how the operation is structured, debt tokenization can: (i) be classified as a security, when it involves a public offering of collective investment; (ii) represent only a private assignment of credit, without public fundraising; (iii) function similarly to instruments such as debentures, commercial paper, or other regulated securities.

This classification is fundamental because it defines rules for registration, disclosure of information, intermediation, custody, and other regulatory requirements.

Pilot Project and Proposed Improvements

ANBIMA has launched a pilot project to test the tokenization of financial assets, with the aim of evaluating operational standards, interoperability between systems, and governance requirements.

In parallel, the entity proposed adjustments to the Central Bank regarding exposure limits to virtual assets for financial institutions, seeking to facilitate integration between the traditional financial system and tokenization-based structures.

These initiatives raise an important point for reflection.How can we encourage technological innovation without compromising the security and stability of the financial system?

This movement indicates a growing convergence between technological innovation and regulation, with the aim of reducing information asymmetries and systemic risks.

Possible Debt Tokenization Structures

Market practice has revealed different ways of structuring credit tokenization, namely: (i) Tokenization through credit assignment – The credit originates from a traditional contract and is subsequently transferred to an issuing entity that issues tokens representing fractions of that credit; (ii) Tokenized native issuance – The debt instrument itself is born in digital format, with full registration in distributed ledger technology, replacing physical records or traditional centralized systems; (iii) Structure with segregated vehicle (SPV) – A specific type of company is created that acquires certain credits and issues tokens backed by those assets, in a logic similar to securitization operations.

Regardless of the structure adopted, some issues remain central. How can the validity of the credit transfer be guaranteed? How should the debtor be notified? What happens to guarantees and asset separation in this structure?

In all cases, aspects such as the validity of the assignment of credit, communication to the debtor, guarantee regime, and asset treatment in case of insolvency continue to be governed by traditional legal rules.

Economic and Operational Benefits

Debt tokenization can bring several benefits, among which the following stand out: (i) credit slicing, expanding investor access; (ii) greater potential liquidity through trading on digital platforms; (iii) greater transparency, with traceability of operations on the blockchain; (iv) possible reduction of intermediary costs; and (v) process automation through... smart contracts These are codes programmed into the blockchain that automatically execute predefined rules, such as payments or ownership transfers.

Given these benefits, could tokenization represent a new stage in the evolution of financing structures?

From a corporate and structured operations perspective, tokenization can enable hybrid financing models, combining traditional instruments with digital asset distribution.

Risks and Challenges

Despite the potential, significant challenges remain, such as uncertainties regarding the regulatory framework for certain structures, the need for robust technological governance, and cybersecurity risks. Added to this are evolving issues in the accounting and prudential treatment of these operations, as well as potential information asymmetries in offerings aimed at the retail market.

In this scenario, an inevitable question arises: does technology solve the challenges of the credit market, or does it merely change the way these risks manifest themselves?

Furthermore, tokenization does not eliminate the risk of default on the underlying credit. It only changes how that credit is recorded and traded.

Tokenization and Capital Markets

The trend points towards a growing convergence between the traditional capital market and digital infrastructures. In this context, the coordinated action of institutions such as ANBIMA, the Central Bank of Brazil, and the Securities and Exchange Commission will be fundamental to building standards that reconcile legal certainty, investor protection, financial system stability, and incentives for innovation.

Given this scenario, a Does tokenization represent merely the digitization of existing instruments, or the beginning of a broader transformation of market infrastructure?

Debt tokenization may not only be a technological shift, but a significant step in the evolution of how financial assets are issued, recorded, and traded.

Article written by: Antonio Mazzucco, Diogo Ferraz, Marina Moreno and Bernardo Fontes.