In the midst of the worldwide cryptocurrency collapse, Brazil’s largest bank Itaú is leading the tokenized revolution with its first digital asset and platform in July 2022, according to local newspapers, and it has nothing to do with cryptocurrencies like Bitcoin.
It was the tokenization of trade finance receivables with a term of 35 days. The bank plans to tokenize other types of real world assets as security tokens and also unveiled a digital asset custody solution. Besides these offerings, the leading Latin American bank is involved in one of nine central bank digital currency (CBDC) experiments in Brazil.
It partnered with the Brazilian stock exchange B3 and enterprise blockchain company R3 to develop payment versus payment (PvP) for international transfers. These applications seem to encourage the usage of CBDC for crypto and institutional applications rather than retail. That might be because Brazil recently launched PIX, a retail real-time payment system.
In December 2021, Vanessa Fernandes moved from CTO of Emerging Tech at Itaú Unibanco to become the CEO at the commercial and investment bank Itaú BBA. Vanessa, the senior executive of the company, will be leading the new endeavor as head of the Digital Assets Unit.
Itaú has created a brand-new unit in its structure, called Itaú Digital Assets, that will provide tokenization capabilities and act as a middleman between companies wanting to take their assets to the blockchain and the market. The company will use a platform called Hyperledger Besu for tokenization purposes, and the tokens created will only be tradable within the exchange of the company.
Fernandes explained that the bank’s first offering was through ETFs, then it moved into proprietary trading. And it is exploring offering retail customers exposure through an exchange. As a result, it’s having discussions with various exchanges.
“It was the IMF that said you have to control the flow of dollars leaving the country. Now you have crypto, so how can you control that?” said Fernandes.
“If a huge bank goes to the public and says we’re doing something, maybe we can affect the whole market, in a good and bad way! So that’s why we are very concerned and cautious about how we can do it right.”
She doesn’t see bigger banks taking the step. Talking at a Chainalysis event in May, she spoke about the bank’s digital currency plans. It invested in a tokenization platform.
In other words, contrary to cryptocurrency firms trying to make headway as independent sources traded on the stock market, leading financial institutions will not have a need for their digital assets at this time.
Take care!
Prof. Carl Boniface
Vocabulary builder:
ETFs = ETFs or "exchange-traded funds" are exactly as the name implies: funds that trade on exchanges, generally tracking a specific index. When you invest in an ETF, you get a bundle of assets you can buy and sell during market hours—potentially lowering your risk and exposure, while helping to diversify your portfolio.
IMF = International Monetary Fund. The International Monetary Fund (IMF) works to achieve sustainable growth and prosperity for all of its 190 member countries. It does so by supporting economic policies that promote financial stability and monetary cooperation, which are essential to increase productivity, job creation, and economic well-being.
Chainalysis = is a blockchain data platform that provides data, software, services, and research to government agencies, exchanges, financial institutions, and insurance and cybersecurity companies in over 70 countries.