Tokenized debt offerings are becoming a reality in Brazil. Kavak, a Mexico-based used car market-focused startup, has issued debt for almost $1 million using tokenized notes to obtain liquidity and working capital in Brazil. The offering, which was intermediate by Liqi, one of the largest token issuers in the country, is guaranteed by the cars that Kavak has in stock and will yield a benefit of 5.5% APY with a 12-month duration.

This first tokenized debt offering was distributed to a series of professional investors and private funds, but the remaining tokens will be offered publicly, following the rules established by the CVM, the Brazilian securities watchdog. Kavak’s goal is to issue up to $5 million to finance its operations in Brazil.

Daniel Coquieri, CEO of Liqi, highlighted the benefits of tokenization to issue debt instruments compared to traditional methods. “In terms of financial cost savings, looking at infrastructure, we have a 60% savings with the tokenization operation at Liqi,” he stressed. This also allows for smaller ticket operations, and the simplification of transactions given there are fewer intermediaries in the process.

Coquieri also remarked that Kavak intends to carry this financing method to other Latam countries where it has a presence. “Discussions are taking place to see how it is possible to apply this to other countries where Kavak is operating, but it is not expected to happen in the short term,” he declared. This is likely due to the different regulatory frameworks and associated compliance costs for each different nation in the region.

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