Brazilian Bank Bradesco Launches First Tokenized Credit Note 

Brazilian Bank Bradesco Launches First Tokenized Credit Note 

Bradesco has made its first tokenized asset transaction on the blockchain in a pilot program. The second largest bank in Brazil transferred $1.25 million worth of credit notes on a regulatory sandbox overseen by the Central Bank of Brazil (BCB) and the Securities and Exchange Commission (CVM). 

Bradesco has become one of the first financial institutions in the country and the Latin American (LATAM) region to incorporate blockchain technology into its services. On January 13, the bank announced the launch of its first tokenized bank credit note. 

Brazil’s second largest private bank completed a credit note transaction of 10 million real – worth $1.25 million – under a regulatory sandbox managed by the country’s central bank, Banco Central do Brasil (BCB). According to a statement released by Bradesco, this was the first tokenized transaction supervised by the monetary authority. The pilot program was carried out in partnership with Bolsa OTC – a virtual asset service provider that tokenises assets listed on the Brazilian Stock Exchange. 

In 2020, the Brazilian Securities and Exchange Commission (CVM) chose Bolsa OTC as one of the finalists for its regulatory sandbox to test asset tokenization of capital market products on a distributed ledger technology (DLT) that powers blockchain networks. Asset tokenization is the process of representing real-world assets like equities, stocks or bonds on the blockchain. It is considered the next big thing in the financial markets. According to a report published by financial strategy provider Boston Consulting Group (BCG) and Singapore-based capital markets platform ADDX, asset tokenization is expected to become a $16 trillion industry by 2030. 

Bradesco is not the first bank to embark on the asset tokenization market in the country. In December, Spanish banking giant Santander issued 40 million real, or $7.8 million, in tokenized bonds to Indigo, a parking service operator in Brazil. Recently, the bank also announced the formation of a digital asset unit as part of its efforts to offer crypto-related services to its customers. In July 2022, Itau Unibanco, the largest private bank in the country, launched its own asset tokenization platform called Itau Digital Assets that converts traditional finance products into digital tokens and also offers crypto-asset custody services to its clients. 

Similarly last May, NuBank partnered with blockchain infrastructure provider Paxos to offer cryptocurrency trading and custody services to its customers. The digital bank became the first financial institution in Brazil to allow its consumers to buy, sell and trade Bitcoin (BTC) and Ether (ETH). 

Last month, former President Jair Bolsanaro signed the country’s highly anticipated crypto regulation into law. According to provisions of the bill, cryptocurrencies are recognised as a digital representation of value that can be “negotiated and transferred by electronic means and used for making payments or for investment purposes”. The federal government has appointed the central bank to oversee crypto tokens that are used for payments, while the Securities and Exchange Commission (CVM) will be in charge of tokens that are considered investment products. 

Brazil is one of the highest ranked countries in the world when it comes to crypto adoption. In August 2022, the country’s tax authority reported that around 16 million Brazilians – 7.8% of the population – owned cryptocurrencies. The number of companies holding crypto assets in their balance sheets also reached an all-time high of 12,053 the same month. According to on-chain data intelligence firm Chainalysis, Brazil is responsible for the highest transaction volume on decentralised finance (DeFi) platforms. 

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