Tradeteq to securitise trade finance receivables on the XDC Network
Tradeteq, a World Economic Forum member, has selected the XDC Network to launch TRADA Tokens, the first ever fully regulated, trade finance-backed fungible security tokens. The move is expected to deliver significant liquidity to the trade finance sector by securitizing a traditionally illiquid asset class on the XDC Network – a public, decentralized 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.
“This launch is an important move in the democratization of trade finance through XDC’s enterprise-grade blockchain technology. By investing in trade finance, which historically has been restricted to banks and larger institutional investors, private investors can now invest in the real economy. The XDC Network is our chosen blockchain to develop this system and XDC is the only crypto asset that can be used to purchase TRADA,” said Nils Behling, CFO and co-founder at Tradeteq.
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. Despite its attractiveness as an asset class, however, 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 tokenising 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.
“XDC Network is completely decentralised and has been optimized for enterprise applications over a period of years. As the preferred network for its token issuance, Tradeteq offers further validation of the XDC Network’s real world utility.” said Atul Khekade, co-founder of the XDC Network.
The TRADA launch signals blockchain’s adoption in a regulated arena. It positions the XDC Network as a way to connect real-world finance origination with DeFi markets, confirming a number of reports by Deloitte, JPMorgan and CoinDesk that foresee a wave of tokenised assets on the blockchain in the years to come.