Latin America’s largest bank, BTG Pactual digital have announced the release of an ICO called ReitBZ that will be backed by distressed real estate assets in Brazil. The token will be registered as an STO.
This is the first time that a registered coin would conduct an STO or Security Token Offering that is offered by a banking firm. BTG plans to raise as much as $15 million through an initial offering for a token called ReitBZ.
Gustavo Roxo, the bank’s chief technology officer, said in an interview
“The token will be based on blockchain technology, the decentralized public ledger of transactions.”
Gemini Dollar, the US-pegged stable coin, will be used as a primary medium of exchange to invest in the STO. Enforce, a BTG-owned company has been assigned to the task of recovering the value from the distressed properties. The investors will receive dividends or profit from price depending on the success of recovery. A variety of local, economic and political factors also affect the rate of improvement.
Nevertheless, the bank expects a yearly return of 15-20 percent in Brazil. These investments are based on debt and hence cannot be hedged. However, BTG has provided for market-making services for the token to maintain and create liquidity.
"BTG is deploying its capital to provide liquidity because it believes in the crypto business,” Roxo said. “We came up with this structure because we think investors in the digital world have a higher risk-taking appetite.”
Banks introduced stablecoins are pegged against the fiat currency to avoid regulatory hindrance and fluctuations. However, stablecoins are centralized and do not associate with the utility of the cryptocurrency. An STO would necessarily mean a registered ‘crypto-token’ that would be traded as an asset freely in the market. The real estate assets will back the value of the token in Brazil.
"We knew we needed to dominate this technology, so we started experimenting with it a few years back,” said Andre Portilho, BTG’s partner responsible for the initiative. “We thought Bitcoin and other currencies were turning too volatile, but we saw an opportunity with this token to try something new -- but also with our skin in the game.”
Tyler Winklevoss, the founder of Gemini Trust, noted: