Real estate tokenization versus real estate funds

You want exposure to the real estate market without buying an entire apartment. Two answers come up often: buying units of a real estate investment fund (FII, fundo de investimento imobiliário, Brazil’s equivalent of a REIT-like fund) or buying “tokens” of a property on a digital platform.

Both seem to do the same thing: split an expensive asset into small pieces. From a legal standpoint, however, they sit in very different places. This article compares the two based on the Brazilian rules in force on October 8, 2026, without recommending either. If the idea of splitting an asset into parts is still new to you, start with how fractional ownership of assets works.

What an FII is, according to the law

The real estate investment fund was created by Law No. 8,668/1993. Article 1 defines it as a pool of resources raised through the securities distribution system and allocated to real estate ventures. The fund has no legal personality.

A few points in the law explain how it works:

• The fund is a closed-end structure: “redemption of units is prohibited” (art. 2). Anyone who wants to exit sells their units to someone else.
• The units are securities, subject to Law No. 6,385/1976 (art. 3), and the CVM (Comissão de Valores Mobiliários, Brazil’s securities regulator) authorizes, regulates and supervises the funds (art. 4).
• The properties are held in the name of an administrator institution, on a fiduciary basis (art. 6). This institution must be authorized by the CVM and fit one of the profiles listed in art. 5, such as a bank or securities distributor.
• The fund’s properties are kept separate from the administrator’s assets: they do not answer for its debts or enter its liquidation (art. 7). These restrictions are annotated in the registration record of each property.
• The fund must distribute at least 95% of profits calculated on a cash basis, based on a semiannual balance sheet (art. 10, sole paragraph).

One point often surprises people: the unitholder “may not exercise any property right over the properties” of the fund (art. 13). You own units, not a piece of the building. In return, you are not personally liable for obligations related to the properties, except for paying for the units you subscribed.

The CVM rules for FIIs

The detailed operation is set out in CVM Resolution 175, which covers investment funds in general, and in its Regulatory Annex III, dedicated to FIIs. The CVM page lists amendments up to Resolution 240/26.

Among other things, the annex establishes:

• What the fund can buy. Property rights over real estate, but also real estate receivables certificates (CRI), real estate credit notes (LCI), units of other FIIs and shares of companies in the sector (art. 40). An FII does not always own buildings.
• Periodic information. The administrator publishes a monthly report within 15 days after the end of the month, a quarterly report within 45 days and, annually, audited financial statements (art. 36).
• Material facts. The annex gives examples of what must be disclosed, such as a property vacancy with a significant impact on returns, construction delays or a relevant lawsuit (art. 37).
• Unitholder voice. There is a unitholders’ meeting, which can be called by anyone holding at least 5% of the units (art. 13).
• Defined charges. The management fee, any performance fee, property maintenance costs, appraisals and other expenses the fund may pay are set in the rules (arts. 33 and 42).

B3, which operates the Brazilian stock exchange, describes the trading features on its FII page: a ticker in the format XXXX11, a standard lot of one unit and settlement in T+2. The same page notes that, since there is no redemption, investors exit “by selling their units on the secondary market”.

What a “real estate token” is

Tokenization is, in the IOSCO definition cited by the CVM, the process of digitally representing an asset or the ownership of an asset. A token is that digital record, usually kept on a blockchain or another distributed ledger technology.

The key point is that “real estate token” is not a category in Brazilian law. It is a commercial label. In practice, it can represent very different things:

• a fund unit, a CRI or another security issued under CVM rules, simply recorded in digital form;
• a contractual right to receive part of the rent or the proceeds of a future sale;
• a stake in a company that owns the property;
• a promise by the platform that the token “corresponds” to a fraction of the property.

Each of these structures gives the buyer different rights. The token itself is just the record; what matters is the contract and the legal structure behind it.

The property record is still the rule

In Brazil, ownership of real estate is transferred between living persons “through the registration of the transfer deed at the Real Estate Registry” (Civil Code, art. 1,245). Until registration takes place, the seller is still considered the owner. Art. 1,227 says the same for other property rights over real estate.

This means that transferring a token on a blockchain does not, by itself, transfer ownership of a property. If your name is not on the property record (matrícula), you are not the owner; at most, you have a claim against whoever is. The discussion is detailed in does a token represent legal ownership of a property? and in what is the difference between a token and a property title.

There was an attempt to create separate rules for the sector outside this system. The Federal Council of Real Estate Brokers (Cofeci) issued Resolution No. 1,551/2025 on digital real estate transactions. According to the Brazilian Institute of Real Estate Registry (IRIB), the Federal Court of the 1st Region suspended its effects in October 2025 and, in February 2026, declared the resolution void, finding that the council had exceeded its authority. The news report does not mention an appeal; the editorial team did not check the status of the proceedings.

When the token is a security

The CVM addressed the subject in Guidance Opinion No. 40/2022. Three points matter here:

1. Tokenization itself “is not subject to prior approval or registration with the CVM”. But if the token is a security and there is a public distribution, the issuer and the offering are subject to capital markets rules.
2. An asset-referenced token “may or may not be a security”. It depends on the economic substance of the rights it confers.
3. It will be a security if it is the digital representation of a security already provided for by law, or if it is a collective investment contract: a collective investment, offered to the public, with an expectation of return that depends on the efforts of a third party, not the investor.

A token that promises a share of rent from a property managed by the platform tends to have these characteristics. In that case, the offering needs CVM registration or an exemption provided for in the rules.

One of the exemptions is investment crowdfunding under CVM Resolution 88. It applies to offerings by small companies (annual gross revenue of up to R$ 40 million), made on a platform registered with the CVM, with a maximum raise of R$ 15 million per year. Ordinary investors are limited to R$ 20,000 per year in these offerings and have at least 5 days to withdraw after confirming the investment. These figures come from the consolidated text consulted on October 8, 2026.

Side by side

Aspect	FII	Real estate token
Legal basis	Law No. 8,668/1993 and CVM Resolution 175, Annex III	Depends on the structure; there is no specific law
What you hold	Fund unit; no property right over the buildings	Whatever the contract says: security, credit claim, equity stake or promise
Who supervises	CVM, over the fund and the administrator	CVM, if the token is a security; otherwise, there is no specific regulator
Where the properties are held	In the administrator’s name, in trust, separate from its own assets	Varies: fund, company, the platform itself or third parties
Investor information	Monthly, quarterly and annual reports, with an annual audit	Required by rules only if there is a regulated offering
Exit	Sale of units to another investor, on the exchange or organized OTC market when listed	The platform’s secondary market, when there is one
Costs	Fees and charges set in the fund rules	Defined by the platform, with no common standard

Liquidity: promise and practice

Liquidity is how easily an asset can be sold quickly without knocking down its price. Listed FIIs can be traded every day on the exchange, but that does not guarantee a buyer for everyone: units of small funds may see few trades, and the price depends on the market.

With tokens, liquidity is an even less tested promise. The IOSCO final report on the tokenization of financial assets, from November 2025, notes that securities issued natively on blockchain have so far shown “low levels of secondary market liquidity”. On tokenized funds, it concludes that many of the promised benefits, “particularly around secondary market liquidity”, are not yet clearly visible in the cases analyzed.

Under CVM Resolution 88, the platform may intermediate resales between investors, provided the issuing company authorizes it. Outside that environment, the buyer may depend solely on the platform itself buying back or finding another interested party.

Risks to compare

Both products can lose money, including a large loss of capital. Property values fall, tenants leave, construction runs late. The difference lies in the risks that add to the property risk.

In an FII, there is market risk (the unit price fluctuates on the exchange, sometimes far from the value of the properties), management risk and concentration risk, when the fund depends on few properties or tenants. The law prohibits the administrator from “promising predetermined returns to unitholders” (art. 12).

For tokens, IOSCO lists additional risks. Investors may not understand what they actually own. The issuer may keep the asset on its own balance sheet, with no structure protecting it in case of bankruptcy. And there is custody risk, which includes loss of title to the asset or its sale without the investor’s knowledge. Add to that technology risk (a smart contract failure, loss of wallet access) and the risk that the offering is irregular. For signs of fraud, see digital financial scams.

An FII can also have tokenized units. In that case, the fund’s rules apply; the token is just the form of the record. The useful question is not “token or fund?”, but “what is the legal structure and who is accountable for it?”.

Questions to ask before any offering

• What is the legal instrument: unit, note, contract or equity stake?
• Does the offering have CVM registration or an exemption? Under which rule?
• In whose name is the property record, and what happens if the platform goes bankrupt?
• What information will you receive, how often, and who audits it?
• How and to whom will you be able to sell?
• What fees are there, on entry, during and on exit?

Taxation also changes depending on the structure. This article does not cover it; check the rules of the Receita Federal (Brazil’s federal tax authority) for your case.

What to take from this article

The FII is a product defined by law, with a supervised administrator, properties separate from the manager’s assets and disclosure rules. Unitholders have no property right over the buildings, but they know exactly what they hold.

“Real estate token” is a label, not a product. It can be a regulated security or merely a contractual promise. Ownership of the property still goes through the property record. And when the token works as a collective investment, the CVM considers that public offering rules apply.