- Ripple and CSD BR will employ the XRP Ledger to reflect ownership data for Brazilian investment funds.
- This initiative begins with BTG Pactual fund shares and might expand to include native issuance as well as other securities.
Brazil is integrating public blockchain technology into regulated financial infrastructure through a cooperation with Ripple and CSD BR. On September 29, CSD BR announced this initiative, which involves BTG Pactual investment fund shares. The operator has over BRL 22 trillion worth of assets registered. The XRP Ledger will reflect ownership data but will not substitute official records of CSD BR. CSD BR stated that the initiative marks the first use of public blockchain technology by the central securities depository for ownership mirroring. The operator has permission from Brazil’s Central Bank and CVM.
Tokenized Shares Will Be Subject to Institutional Controls
The shares issued by the fund will be based on the multi-purpose token standard of the XRP Ledger used by Ripple and CSD BR. The multi-purpose token standard allows for the setup of rules regarding financial assets and includes restrictions for approved participants as well as asset recovery processes. Corporate and banking institutions need to go through the verification process and anti-money laundering processes prior to gaining entry to the platform. CSD BR will control token issuance, participant approval, administration, and asset freezing. It will also manage clawbacks when regulatory or judicial action requires asset recovery. The blockchain infrastructure will be provided by Ripple together with the custody system.
Project May Be Expanding Beyond Brazilian Securities
This project can go further from simple record mirroring depending on whether the project meets its objectives at this stage. In subsequent stages, there may be the issuance of native financial instruments within the XRP ledger. Tokenized instruments would then be traded through the blockchain network by approved participants. These may include Real Estate Receivables Certificates which are known as CRIs and Agribusiness Receivables Certificates that are called CRAs.
These are Brazilian fixed income securities which are backed by sector-specific receivables. Other tokenization activities in Brazil already have projects that are being undertaken by VERT and Mercado Bitcoin. For instance, VERT created a private credit platform which is based on XRPL, and it holds a BRL 700 million agribusiness receivables certificate. On the other hand, Mercado Bitcoin planned to tokenize more than $200 million worth of real-world assets.
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