The move is expected to deliver significant liquidity to the trade finance sector by securitising a traditionally illiquid asset class on the XDC Network – a public, decentralised blockchain.
The collaboration represents the next evolution in the Tradeteq and XinFin partnership, which first introduced trade finance-based non-fungible tokens (NFTs) for institutional investors in September 2021. Like the TRADA launch, the NFT offering used XinFin’s XDC Network to transform trade finance assets into a non-fungible token, which Tradeteq re-packaged and distributed to investors.
By using fungible security tokens with concrete collateral (TRADA), Tradeteq begins the process of ramping up on-chain transaction volume of regulated, real-world assets and extends access to the trade finance market to both retail and institutional investors.
Trade finance assets, which are based on the flow of tangible goods around the world, traditionally carry little risk and yet promise investors a steady stream of stable rewards. Trade finance is at present scarcely even investible due to the high barriers of entry, including poor visibility for beneficiaries, insufficient levels of collateral and complex regulatory, and supply chain procedures.
XDCTEQ, a new entity established to issue the TRADA tokens, is set to overcome these barriers by fractionalising and tokenizing pools of repackaged, securitised trade finance assets on the XDC Network. At the same time, the offering will give SMEs the world over unprecedented access to the financing on which they depend.
The TRADA launch signals blockchain’s adoption in a regulated arena. It positions the XDC Network to connect real-world finance origination with DeFi markets, confirming a number of reports by Deloitte, JPMorgan, and CoinDesk that foresee a wave of tokenized assets on the blockchain in the years to come.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now