CSD BR and Ripple Launch XRP Asset Tokenization in Brazil

Brazil is taking another step forward in blockchain-based financial infrastructure as CSD BR and Ripple begin the first phase of a strategic alliance focused on asset tokenization. The initiative combines CSD BR’s governed infrastructure as a registrar, central securities depository and settlement system with the XRP Ledger (XRPL). The initial phase will use the public blockchain as a complementary layer for recording and auditing financial assets, beginning with BTG Pactual investment fund shares. CSD BR will continue to maintain the official records, while authorized participants will be able to use the blockchain to verify records transparently and in real time.

CSD BR Uses the XRP Ledger for Tokenized Assets

According to the press release, under the first phase, BTG Pactual investment fund shares deposited at CSD BR will be tokenized and mirrored on the XRP Ledger using the Multi-Purpose Token (MPT) standard. The blockchain will not replace CSD BR’s current systems. Instead, it will operate as an extra layer for querying and auditing financial asset records. CSD BR will remain the official source of record for registration, deposit and settlement.

As per CSD BR, the model allows authorized participants to validate the consistency of records in a transparent and near-real-time environment. The initiative will also allow organizations to evaluate blockchain technology through live transactions rather than depending solely on pilots or proofs of concept. CSD BR currently has more than BRL 22 trillion in registered assets and operates infrastructure capable of processing millions of transactions within minutes. The alliance is intended to evaluate potential improvements in transparency, traceability, automation and efficiency  while operating within the current governance framework.

The blockchain environment will operate on a permissioned basis for corporate and banking clients in Brazil. Participants will be subject to regulatory Know Your Customer (KYC) and anti-money laundering (AML) requirements. Ripple’s custody infrastructure will work alongside the native capabilities of XRPL to support the tokenized assets in this environment. CSD BR will continue to control the issuance and administration of the assets, including participant authorization. 

The infrastructure will also retain compliance functions such as freezing individual assets and reversing transactions through clawback mechanisms when required by regulatory or judicial orders. Daniel Polano Spreafico, Head of Products and Clients at CSD BR, said the company chose record mirroring as the starting point because it allows the technology to be introduced into critical market infrastructure without changing present processes for stakeholders, issuers and participants.

The initial approach is designed to allow CSD BR to assess how blockchain performs under real operating conditions while establishing a foundation for potential future applications.

What Are the Next Steps for CSD BR and Ripple? 

Following validation of the initial mirroring phase, CSD BR and Ripple plan to slowly expand the use of blockchain infrastructure towards native asset issuance and trading among authorized participants. Future assets being considered include Real Estate Receivables Certificates (CRI), and Agribusiness Receivables Certificates (CRA), which represent massive segments of Brazil’s fixed-income market. The planned evolution of the platform will also add extra confidentiality mechanisms designed to address privacy requirements within the financial niche.

The initial initiative’s focus in Brazilian asset institutions are expected to have been designed with the probability of supporting extra asset classes and participants in the future. The model could also probably be expanded to other international markets. 

Silvio Pegado, managing director of Ripple for Latin America, described the move from pilot and proves the concept to live record-keeping infrastructure within a national capital market as a significant development for the industry. He said the alliance demonstrates how distributed ledger technology can be added into critical financial infrastructure within a governed framework. 

BTG Pactual is also participating in the initiative, with Luis Cotardo, the bank’s partner responsible for market infrastructure, saying the project allows the organization to contribute to applying blockchain technology to the fund market while maintaining a governed infrastructure and the current official record. The first phase therefore keeps CSD BR’s established registration and settlement processes intact, while introducing the expected ledger as a transparent blockchain-based peer-to-peer records mirroring and auditing. 

If the initial implementation is validated, the alliance will move towards wider tokenization and onboarding activity involving additional Brazilian financial assets and authorized market participants.