The Surging Trend of Tokenized Securities in Microfinance
Bitfinex Securities has recently announced the launch of two new tokenized bond issues in partnership with Mikro Kapital’s securitization fund, ALTERNATIVE. This move comes as the second tokenized bond issuance since the companies signed a Memorandum of Understanding back in October of last year.
Mikro Kapital, an impact investment and microfinance company based in Luxembourg, has been providing financial services and microcredit to small and medium-sized enterprises (SMEs) in emerging markets, primarily in Central Asia and Europe, since its establishment in 2008.
The bond program presents two options: 11-month and 36-month bonds, featuring coupon rates of 10% and 13.5% respectively. These bonds, issued on the Liquid Network, aim to raise between 500,000 to 10,000,000 USDt, with a minimum investment requirement of 125,000 USDt.
This issuance program will be a monthly occurrence, with future plans to include a wider range of durations and coupon rates.
Jesse Knutson, Head of Operations at Bitfinex Securities, highlights the importance of this collaboration in merging traditional and cryptocurrency investments, with the ultimate goal of revolutionizing financial solutions in the microfinance sector. Knutson states, “By leveraging the Liquid Network, we are introducing innovative financial solutions that merge the strengths of traditional and crypto investments. We are thrilled to continue our ongoing collaboration with Mikro Kapital and support them in bringing new forms of financing to the microfinance sector through this latest tokenized bond issuance.”
The Liquid Network, a layer-2 solution for Bitcoin developed by Blockstream, enhances the functionality of the Bitcoin blockchain by facilitating faster and more private transactions, as well as the issuance of digital assets. Operating as a sidechain to Bitcoin, it maintains a 1:1 peg with Bitcoin through peg-in and peg-out processes.
Liquid enables asset issuance, including regulated security token offerings. By allowing issuers to enforce transfer restrictions and create allowlists, it ensures compliance with regulations while enabling investors to self-custody, withdraw, and trade securities peer-to-peer.
The funds raised through these bond issues will be allocated to microfinance and sharing economy projects that support small businesses and entrepreneurs in emerging markets. ALTERNATIVE, Mikro Kapital’s securitization fund, currently assists 180,000 end-borrowers across ten countries, holding a loan portfolio of roughly €300 million. Noteworthy is the fact that 35% of the beneficiaries of this fund are women entrepreneurs in local and rural communities.
Having already raised over $5.2 million USDt in its debut tokenized bond in October 2023, which marked a first in microcredit, Mikro Kapital aims to further bolster small businesses and entrepreneurs in emerging markets through this latest offering.
The capital raise for these new bonds will commence on July 3, concluding on July 31.