How debenture tokenization works

A debenture is a way for a company to borrow money directly from investors, without going through a bank. In recent years, some of these debts have started to circulate as tokens, digital records on a shared network.

This article explains what a debenture is, what changes when it is tokenized, what has already been done in Brazil and which risks stay the same. For the general concept of tokenization, see what asset tokenization is.

What a debenture is

The definition is in Brazil’s Corporations Law. Article 52 says a company may issue debentures that give holders a “credit right against it”, under the terms of the deed of issuance (the indenture), the document that sets the term, remuneration, collateral and the company’s obligations.

In practice, you lend money to the company and it undertakes to pay it back with interest, on the agreed dates. Some elements of the law matter for understanding the token version:

• Collateral. Under article 58, a debenture may have secured collateral, a floating charge, no preference, or be subordinated to other creditors. This defines your place in line if the company goes bankrupt.
• Trustee. Article 68 says the agente fiduciário (trustee) represents the debenture holders as a group before the company. It is the party that monitors compliance with the indenture on behalf of all.
• Debenture holders’ meeting. Under article 71, holders of the same issue or series can meet to decide matters of common interest, such as renegotiations.
• Record-keeping. Article 63 provides that the indenture may establish that debentures be held in custody accounts, in the holders’ names, without issuing paper certificates.

Debentures are also on the list of securities in article 2 of Law 6,385/1976. That is why offerings to the public are supervised by the CVM (Brazil’s securities regulator).

What changes when a debenture becomes a token

A debenture has been an electronic record for years. Tokenizing means taking that record, or a representation of it, to a distributed ledger (DLT, distributed ledger technology), a database maintained by several participants.

There are two ways of doing this, and the difference matters:

• Token as a mirror. The legal record stays with an authorized institution (bookkeeping agent or custodian), and the token tracks that record on the network. If the two diverge, the official record prevails.
• Native on-network record. The network itself would be the record of who the holder is. This model depends on rules the CVM is still designing, as the pilot described further below shows.

What tokenization promises:

• Faster settlement, with the security and the payment changing hands in the same transaction.
• Automatic events, such as interest payments and amortization, written into smart contracts, programs that run on the network itself. See how smart contracts work.
• Smaller fractions and secondary trading on digital platforms.

What does not change: the debtor is the company, under the terms of the indenture. The collateral, the subordination, the trustee and the meeting all still apply as with a traditional debenture.

How a tokenized issuance happens, step by step

The outline below is a general description, based on the rules cited. Each transaction has its own documents.

1. The company approves the issuance. Under article 59 of Law 6,404, the decision falls to the general shareholders’ meeting, which sets the amount, series and terms. Since Law 14,711/2023, the board of directors or the executive board may decide on debentures not convertible into shares, unless the bylaws provide otherwise.
2. Deed of issuance. It defines remuneration, term, collateral and, where applicable, the trustee.
3. Public offering under CVM rules. Since CVM Resolution 160, from 2022, public offerings of securities follow this rule, which revoked the old Instructions 400 and 476. Offerings by small companies can use the crowdfunding regime of CVM Resolution 88, raising up to R$ 15 million a year; in that case, the platform must make a copy of the debenture indenture available to investors before the offering begins.
4. Token issuance. A platform creates the tokens on the chosen network and delivers them to investors, linked to the registered position.
5. Life of the security. Interest and amortization are paid according to the indenture. If there is secondary trading, it takes place in an authorized venue.

What has already been done in Brazil

The path of tokenized debentures in the country went through the CVM’s regulatory sandbox, an environment in which the regulator authorizes innovative business models for a limited time, with specific exemptions from rules.

According to the official sandbox page, in 2021 the CVM approved the proposal by Vórtx DTVM and Vórtx QR Tokenizadora to operate an organized over-the-counter market aimed at qualified and professional investors, with trading of debentures and closed-end fund shares, among others. The tokens would be issued on the Hathor network and the offerings would follow the then-applicable CVM Instruction 476. The exemptions are in CVM Deliberation 875, from September 2021, which was later amended.

One publicly disclosed example: in July 2022, the law firm Mayer Brown said it had advised on Pravaler’s first issuance of tokenized debentures, worth R$ 60 million, in a restricted-efforts offering under CVM Instruction 476, coordinated by Itaú BBA and Vórtx DTVM. The text describes the transaction as one of the first token-linked debentures under the sandbox authorizations. It is a source from one of the advisers on the transaction, not official CVM data.

What is under discussion now

On September 16, 2026, the CVM announced that its Tokenization Working Group had delivered to the Board a draft resolution for a pilot program. The proposal provides for tests of issuance, offering, trading, bookkeeping, custody, central depository and settlement of securities on DLT networks, and expressly mentions shares, debentures and receivables certificates.

As of the date consulted, it is a proposal. The planned tests would last 60 days, extendable by up to 30. The broader framework is in regulatory limits of tokenization.

A debenture token is not the same as a “fixed income token”

Not every token that pays interest is a debenture. In Circular Letter CVM/SSE 4/2023, the CVM addressed so-called fixed income tokens, which may be backed by credit rights or debt securities. According to the CVM, depending on their characteristics, they may be securities.

The practical difference:

• With a tokenized debenture, you are a direct creditor of the issuing company, with an indenture and a trustee.
• With a debt-backed token, you may be a creditor of an intermediate structure, and your right depends on how that structure was set up.

For receivables structures, see receivables tokenization and how to tokenize credit rights.

The risks that remain yours

Credit risk. If the company does not pay, the token does not pay. Your position depends on the collateral and subordination set out in the indenture. Losing part or all of the amount is possible.

Liquidity. A digital secondary market does not guarantee a buyer. Trading restricted to certain investors or to a single platform can make selling difficult.

Platform and record-keeping. If the platform stops operating, you need to know where the legal record of your position is and how to exercise it off the network.

Technology. Smart contract bugs, loss of wallet access or integration errors can delay payments or block transfers. More in why tokenization does not eliminate risk.

Before investing, check: who the issuer is and what its financial situation is, whether there is a trustee, what collateral exists, what the offering’s CVM regime is, who the bookkeeping agent is and whether the token is the official record or just a mirror of it.

Key takeaways

• A tokenized debenture is still a debenture: a debt security, a security under the law, with an indenture, collateral and a trustee defined by law.
• In Brazil, the experience came through the CVM sandbox, for qualified and professional investors. A broader pilot with DLT networks has been under proposal since September 2026.
• The token can make settlement and record-keeping faster, but the main risk is still that of the debtor company, plus platform and technology risks.