Tradeteq to securitize trade finance receivables on the XDC Network

By Joy Dumasia

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 securitising a traditionally illiquid asset class on the XDC Network, a public, decentralised 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. Tradeteq begins ramping up on-chain transaction volume of regulated, real-world assets and extends access to the trade finance market to retail and institutional investors. 

“This launch is an important move in the democratisation 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, trade finance is presently 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 unprecedented access to the financing on which they depend. 

“XDC Network is completely decentralised and has been optimised 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. 

Recently, IBS Intelligence reported that Tradeteq, the technology provider for illiquid credit distribution, has launched Tradeteq Access Lite, the first-ever marketplace for buy-side investors to participate in the secondary trading of trade finance assets.