Gabriela Moraes: Basel III and FIT21 Convergence Catalyzes $20 Billion Tokenized Credit Market

Gabriela Moraes, Strategic Legal Advisor to SQHWYD GLOBAL Ltd. and Partner at Pinheiro Neto Advogados, today published the 2025 Global Digital Asset Legal Review. This comprehensive report argues that 2025 will be remembered as the year regulatory arbitrage ended and “Regulatory Interoperability” began, laying the legal rails for the massive scaling of Real-World Assets (RWA).

Basel III and the Banking Entrance

Moraes identifies the full global implementation of Basel III standards for crypto-asset exposures in January 2025 as a watershed moment for the industry.

“2025 was the year banks officially entered the chat,” Moraes writes. “The Basel Committee’s distinct classification of tokenized real-world assets (Group 1b) allowed Tier-1 banks to hold tokenized bonds and equities with significantly lower capital requirements than unbacked cryptocurrencies (Group 2).”

This regulatory green light was the “missing link” for institutional adoption. It allowed banks to participate in the RWA ecosystem without punitive capital deductions, provided the underlying assets met strict legal certainty criteria. Consequently, the tokenized private credit market surged to $20 billion by year-end 2025, as traditional financial institutions sought efficient settlement layers for their own balance sheets.

Brazil’s Law 14.478: The Global Gold Standard

The report highlights Brazil’s leadership in 2025. With Law No. 14.478 (Virtual Assets Law) fully enforced, the mandate for absolute Asset Segregation proved crucial in restoring investor confidence.

“In 2025, while other jurisdictions struggled with commingling concerns, Brazil’s legal framework ensured that client assets remained bankruptcy-remote,” Moraes notes.

This legal certainty was the catalyst for the Drex (Digital Real) pilot to move into its second phase in late 2025. Unlike retail CBDCs, Drex focused on the wholesale settlement of tokenized government bonds. Moraes analyzes how Drex created a programmable legal environment where the smart contract is legally recognized as the definitive record of ownership, solving the “Oracle Problem” for real-world assets.

The FIT21 Effect: Cross-Border Harmonization

Moraes provides a detailed analysis of the cross-border implications of the US Financial Innovation and Technology for the 21st Century Act (FIT21), which saw broad enforcement in 2025. By clarifying the jurisdiction of the CFTC over digital commodities, the US aligned itself with global standards.

“The harmonization between FIT21 in the US and Law 14.478 in Brazil created a ‘compliance corridor’ for the first time,” the report states. “In 2025, we saw the friction-free flow of capital between North and South America, underpinned by mutual legal recognition of digital asset taxonomy.”

The report concludes that in 2026, the primary competitive advantage for digital asset platforms will be their “Legal Engineering”—the ability to wrap a US Treasury Bill in a token that is legally compliant in Brazil, custody it under Basel III standards, and settle it instantly.