There is no longer any doubt about the impacts of disruptive technologies on financial products, especially with tokenization, an agile, transparent, secure business vehicle that enables better results to be achieved. This is the path the market will take with FIDC tokenization.
The current management models no longer appeal to investors, whether it’s the over-regulation of the financial and banking systems, the high costs imposed, or the growth of cyber attacks that put trust in custodians’ security architectures in jeopardy.
Tokenizing assets and rights is already a reality in several market sectors, such as real estate tokenization, in agribusiness, and even in soccer clubs.
Trading tokenized credit fund shares is a natural evolution with all the advantages and challenges it brings.
BLOCKBR, a web 3.0 native company, will talk about FIDC and how tokenization will bring profound and positive changes for companies, funds and investors!
WHAT ARE THE CREDIT RIGHTS
Credit rights or receivables funds are all amounts recognized as liquid and certain that a company will be entitled to receive in the medium and long term for the performance of its activities – industry, commerce, service provision – or for contractual rights.
In corporate language, it is the company’s accounts receivable, which can be represented by:
- Future customer receipts;
- Rental contracts, loans granted or rights acquired;
- Gains in legal disputes.
So we are talking about a company’s rights as a creditor of a third party. Usually, the anticipation of receipts occurs when the company wants it to:
- Raise funds to finance new projects (improvements, business expansion) immediately;
- Paying off short-term debts;
- Rebalance the cash flow.
It is possible to negotiate the anticipated receipt of these revenues with the traditional banking system – receivables anticipation operations, or sell the rights to a receivables investment fund.
WHAT IS FIDC
Receivables investment funds are a type of fund that focus on acquiring credit rights of companies. In practice, it is the active search for these credits, instead of companies going to banks.
The FIDC is a capital market product regulated by the CVM. So, when we talk about tokenization of receivables funds, it is a security token or
security token
.
HOW FIDC WORKS
The operation of an FIDC is simple.
- The fund is formed by quota holders that make up the capital of the FIDC;
- The FIDC management goes to the market to capture companies that want to trade their receivables;
- The receivables portfolio is bought at the disaggregated price – the difference is the fund’s risk space and profit margin;
- The results are distributed in proportion to the amount invested by each shareholder.
As with other investment funds, the quality of the management is fundamental to make the best decisions, following the market and noticing the good opportunities.
WHAT ARE THE CHARACTERISTICS OF FIDC
TYPES OF FIDC QUOTAS
- Senior Quotaholders: they are guaranteed a pre-fixed remuneration that must be paid before subordinated quotaholders, including in cases where the fund’s profitability is lower than expected;
- Subordinated quotaholders: they receive only after senior quotaholders, but their profitability can be more advantageous; when the result is higher than expected, they keep 100% of the excess to the senior quotaholders’ pre-fixed gain.
FIDC MODELS
- Open-end FIDC: funds with undetermined duration, where quota holders can redeem at any time or increase their participation, according to the stipulated rules;
- Open-end FIDC: funds with a fixed duration and redemption only occurs at the end of the duration, upon liquidation of the fund or by another defined rule. The quota holder can sell his FIDC quotas in the secondary market.
ADVANTAGES AND DISADVANTAGES OF FIDC
FIDC ADVANTAGES
- It is a fixed income investment with good profitability, in many cases higher than the CDI;
- They are regulated and inspected by the CVM;
- It is rated by rating agencies, creating an extra layer of security;
- Allow trading the quotas in the secondary market.
DISADVANTAGES OF FIDC
- It has low liquidity and higher risk than other fixed income products;
- It is not guaranteed by the Credit Guarantee Fund (FGC);
- They are destined to qualified and professional investors, with an entrance value of R$25,000, which restricts access.
HOW TOKENIZATION IS TRANSFORMING FIDC
Third-party asset management is a vitally important segment in the global financial market, as it accounts for a large part of the movement of assets in economies. It is estimated to reach almost $150 trillion by 2025.
How to support such a large volume of operations, among which are the investment funds and especially the receivables funds, with agile and effective governance models that give precise answers?
The answer lies in the tokenization of receivables funds, which brings an important transformation to the product, both for those who offer and those who wish to buy tokenized FIDC shares, increasing their attractiveness.
WHAT ARE THE ADVANTAGES OF TOKENS IN FIDC
DECENTRALIZATION AND SECURITY
The tokenization is hosted on a blockchain, the ecosystem composed of an infinite number of computers with high processing power and each one maintains an exact copy of the position of the fund.
In the current model, the fund’s data are concentrated on a server at the financial institution and are dependent on its security policies. When using a token, the transactions – share sales, redemptions, remunerations – must be validated by all computers.
Each operation is encrypted and entered into a data string with unique identifications. This digital architecture prevents virtual attacks and fraud.
TRANSPARENCY AND COST REDUCTION
The entire FIDC management, within the blockchain, is done by smart contract, an encrypted digital document that reflects a contract with all the conditions to operate the fund.
The smart contract electronically executes the expected operations – for example, what should be done when a shareholder requests redemption, when a new investor enters, or when it is time to liquidate the fund.
There is no human labor and this reduces several costs that exist today in fund management – people, systems, fees – eliminates risks of errors and delays in human labor, and gives transparency to the process.
DEMOCRATIZATION IN INVESTMENT
The great obstacle to the growth and popularization of FIDC is the entry barrier: qualified investors (minimum value of R$ 25 thousand), financial market professionals, or investors starting from R$ 1 million.
Tokenization fractions fund shares into much smaller amounts, which attracts an increasing number of people who have reasons to invest in tokens.
There are experiences with credit rights funds where part of the flows have been tokenized to be traded as a fixed income product.
The democratization of receivables fund tokens will increase interest and companies will have more options to trade their receivables.
Want to learn more about the tokenization revolution in the credit market? Download our e-book and get qualified information!
COME TOKENIZE YOUR ASSETS WITH BLOCKBR!
Do you want to negotiate your assets and rights with more agility, transparency and better results? Do you want to operate with tokenized funds and offer a more attractive and profitable product?
So the first step is to talk to a BLOCKBR tokenization expert.
We study the technical, legal, and fiscal feasibility of assets, rights, and also the creation of product and service programs for companies in all markets.
Schedule a meeting with us and bring your business up to date!
BLOCKBR Digital Assets is a web 3.0 native fintech that unites technological innovation and digital knowledge to transform physical assets into digital ones, in the process of tokenization.
The supply of tokenized assets is democratic and decentralized, which makes the way of investing safe, simpler and more efficient.
We enable, structure, issue and offer tokens on our platform and beyond. Be aware that tokens depend on feasibility and regulatory factors.
Do you want to tokenize your business or part of it? Do you have a business solution and does it make sense to issue your own token ?
