Trade finance technology specialist Tradeteq said it has chosen the XDC Network to launch TRADA Tokens, which it called “the first ever fully regulated, trade finance-backed fungible security tokens.”
According to a Monday (July 25) news release, Tradeteq expects the move to deliver “significant liquidity” to the trade finance space by securitizing an asset class that has typically been illiquid over the XDC Network — a public, decentralized blockchain.
The company noted that this collaboration is the latest in a long-term partnership between Tradeteq and XinFin, which debuted trade finance-based non-fungible tokens (NFTs) for institutional investors last September.
“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,” the company said.
Nils Behling, Tradeteq’s co-founder and CFO, said the launch was an important step in “democratizing” trade finance, a sector he said has traditionally been the domain of banks and larger institutional investors.
It’s also an area that has been difficult to invest in, the company said, due to “high barriers of entry, including poor visibility for beneficiaries, insufficient levels of collateral and complex regulatory and supply chain procedures.”
XDCTEQ can overcome those obstacles, the release said, “by fractionalizing and tokenizing pools of repackaged, securitized trade finance assets on the XDC Network.” At the same time, the offering will provide small businesses with new access to financing.
Earlier this month, Tradeteq debuted Tradeteq Access Lite, a marketplace for investors to practice secondary trading of trade finance assets.
More than 40 members of the Trade Finance Distribution Initiative (TFDI) have joined the platform, the release stated. The TFDI sets the standards for global trade finance distribution, with a membership made up of a number of the world’s largest banks and asset managers.
Tradeteq said at the time the market for trade finance assets is predicted to be worth $10 trillion by 2027, but many would-be investors have been kept out due to the lack of a secondary marketplace. By creating such a marketplace, Tradeteq seeks to make trade finance a liquid asset class.