Latin American Investment Bank Launches Real Estate Backed Cryptoasset

February 25, 2019 / by Steven Lubka

The largest standalone Latin American investment bank is making some big waves in the world of cryptocurrency. Banco BTG Pactual SA is launching its own security token backed by distressed real estate assets in Brazil. The token ReitBZ will be launched on a blockchain platform that has yet to be specified.

To invest in the token investors will need to use either the Gemini Dollar (which has recently come under considerable controversy for refusing to allow large players to redeem the token for actual dollars) or Ether (ETH). The token will issue dividends through a company owned by the bank Enforce. Enforce will distribute dividends gained that are expected to be 15 to 20 percent per year. These dividends are tied to the Brazilian national currency, however, so any changes in the value of the currency will be reflected in the dividend issued by the token.

To ensure liquidity, BTG itself will offer market making services for investors so they are easily able to sell their tokens when needed.

The CTO of BTC, Gustavo Roxo, made the following comment expressing his belief in crypto assets “BTG is deploying its own capital to provide liquidity because it really 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.”

It seems no surprise that countries in South America are quicker to embrace cryptocurrencies. While Americans may lack the cultural memory of currency devaluation to truly grasp the benefits of non-sovereign money, in South America examples are abundant. In fact, the token will not be available to American investors at first.

“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.”

The token will be available to investors all around the globe, although it will initially exclude US and Brazilian investors. It is likely that US investors are being blocked due to the actions and stance of the SEC on all things related to cryptocurrency.

BTG believes that issuing a cryptoasset will allow it to cater to a global body of investors in a cheaper manner than traditional financial instrument offerings. It will also make the trade of said asset much simpler. The asset will be available to be purchased perpetually although the initial offering period will be for 90 days. The sale itself provides the capital to be invested into the portfolio of distress real estate assets.

The security token offering will be released alongside increased interest by institutional banks in the issuance of cryptoassets. JP Morgan announced last week it will be offering a bank-backed cryptocurrency, JPM Coin. While both offerings lack some of the defining features of a true “cryptocurrency,” they represent a gradual embrace of the technology that backs cryptocurrencies.