Kavak, a prominent startup in the used car industry in Latin America, has taken a bold step by issuing tokenized debt to invest in the Brazilian car market. Reports suggest that the company has already tokenized close to $1 million in commercial notes through Liqi, a tokenization platform, and has plans to issue over $5 million.
Kavak's Move Towards Tokenized Debt to Secure $5 Million in Capital
Tokenized debt offerings are gradually becoming a reality in Brazil. Kavak, a Mexico-based startup focused on the used car market, has issued debt of nearly $1 million using tokenized notes to access liquidity and working capital in Brazil. The offering was facilitated by Liqi, one of the leading token issuers in the country. The debt is backed by the cars that Kavak has in its inventory and will generate a return of 5.5% APY over a 12-month period.
While the initial tokenized debt offering was limited to professional investors and private funds, the remaining tokens will be made available to the public, following the regulations set by CVM, the Brazilian securities watchdog. Kavak's objective is to raise up to $5 million to support its operations in Brazil.
Daniel Coquieri, the CEO of Liqi, emphasized the advantages of tokenization in issuing debt instruments compared to traditional methods. He highlighted, "In terms of financial cost savings, considering the infrastructure, we achieve a 60% reduction in costs through the tokenization process at Liqi." This approach also enables smaller-scale operations and simplifies transactions as there are fewer intermediaries involved.
Coquieri further mentioned that Kavak plans to extend this financing method to other Latin American countries where it operates. However, he stated that this expansion is not expected to happen in the near future due to the varying regulatory frameworks and associated compliance costs in different nations across the region.
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