💷 Trade Finance

BRX Finance's trade finance use case revolves around a structured, tokenized financial process designed to enable secure and efficient financing operations.

Here’s an in-depth breakdown of this use case:

Key Components and Actors:

• Investor:
  The participant who injects capital into the system by converting Brazilian Reais (BRL) into digital Reais (BRZ) and subsequently investing in tokenized debentures or certificates of receivables (CRs).
• Transfero Pagamentos:
  Facilitates the conversion of BRL to BRZ. The digital Reais (BRZ) are issued to the investor after the BRL is deposited in a pooled account at Banco Genial.
• Transfero Securitizadora:
  Issues debentures or certificates of receivables (CRs). These securities are tokenized to represent a digital asset, similar to a Certificate of Deposit (CD), and comply with local Brazilian regulations (CVM 476 for private offerings and CVM 88/22 for exemption from registration).
• Stark Bank:
  Acts as the custodian for the segregated accounts that hold the capital, which will be disbursed for trade operations after the tokens are purchased by the investor. The bank is compliant with fiduciary and segregated asset regimes as required by the legislation (Law No. 14,430/2022).

Process Workflow:

• BRL to BRZ Conversion:
  The investor initiates the process by transferring BRL to Transfero Pagamentos via PIX or a similar transfer mechanism. The BRL is stored in a custodial account at Banco Genial, and Transfero issues BRZ (digital Reais) equivalent to the amount deposited.
• Tokenized Debentures or CRs Issuance:
  Transfero Securitizadora issues tokenized debentures or CRs, representing a digital security that investors can purchase using their BRZ. The issuance of these digital tokens complies with regulations to ensure the segregation of risk between operations. This system prevents cross-contamination of risks from other operations or the securitization entity itself【5†source】.
• Investment in Tokenized Debentures/CRs:
  The investor uses the digital Reais (BRZ) to buy the debenture or CR tokens. The BRL backing the BRZ is transferred from Banco Genial to a segregated account in Stark Bank, which is specifically assigned to the corresponding debenture or CR operation. This ensures that funds are allocated securely and transparently.
• Trade Finance Operations:
  The proceeds from the sale of tokens are then disbursed to finance the underlying trade finance operations. These funds can be used for a variety of trade-related expenses, including deposits, nationalization (import-related activities), and other trading costs, following a structured sequence that minimizes risk and ensures compliance with local laws. The structured process also involves the issuance of commercial notes (Notas Comerciais) and bills of lading (BL) as collateral for the trade finance operations.
• Final Payment and Liquidation:
  After the trade operation is completed and the goods or services are delivered, the system ensures the return of principal plus interest to the investors. The investor exchanges their debenture or CR tokens for BRZ, which is then converted back into BRL and deposited into the investor’s account.
• Risk Mitigation:
  Fiduciary and Segregated Asset Structure: The system complies with the legal framework ensuring that risks from one operation do not affect another. The issuance of tokenized debentures and CRs follows strict legal protocols (Law No. 14,430/2022), which protect investors by segregating the assets of different operations.
• Custodian Banks:
  The involvement of custodian banks like Stark Bank and Banco Genial ensures that the digital assets are securely backed by real funds, reducing counterparty risk.
• Regulatory Compliance: The process is compliant with Brazilian financial regulations, including private offerings and securitization laws, enhancing the security of the financial instruments involved.
• Annual Volume and Scale:
  The operation's potential scale is significant, with projected volumes reaching approximately $1.6 billion annually.

Summary

This comprehensive framework, blending traditional trade finance with tokenized assets, ensures secure, compliant, and efficient funding for trade operations while leveraging the flexibility of digital assets and blockchain technology.