The impact and microfinance investment firm is collaborating with Bitfinex Securities to issue tokens that will be linked to capital raising for microfinance.
Mikro Kapital, the Swiss-based impact finance and microfinance firm, has launched the market’s first tokenised bonds for microcredit.
The initiative was developed in collaboration with cryptocurrency exchange Bitfinex, and paves the way for new types of investment into the microfinance sector.
Speaking to Impact Investor, Michele Mattioda, investor relationship director and member of the board at Mikro Kapital, said: “The idea of launching a tokenised bond was very much in line with our values. We are not just an asset manager selecting opportunities in the microfinance space. Our aim is to link investors with the end borrowers of microfinance. In the same way, removing intermediaries is a concept of blockchain, and it can support financial inclusion by offering direct access to finance, and by being fast and efficient.”
The partnership between Mikro Kapital and Bitfinex involves defining tokenisation projects, the listing and trading of debt securities, and the evaluation of the use of Tether tokens linked to USD (USDT) and euros (EURT) for capital raising.
Each token can be exchanged, and will trade on Bitfinex’s platform in a denomination of 100 USDT. The first tokenised bond, with a three year maturity and 10% interest rate, will have a total size of 10 million USDT. After this first launch, Mikro Kapital is planning more issuances.
Broadening investor base
The company believes that tokenised bonds can attract a wider base of investors to the microfinance sector.
“We are targeting professional and institutional investors who want to look not only at an economic return but also want to use the digital asset framework to look at the impact they can make in the real world,” said Mattioda.
Mikro Kapital’s current network of investment is largely made up of family offices, and those offices are undergoing a generational change, which has implications for digital assets, he added. “Digital assets are critical for digitally native investors. In order to be able to service our investor base, which is changing, we will have to change as well.”
A growing marketplace
The global market for microfinance was estimated to stand at $200bn in the year 2022, and is projected to reach a revised size of $506bn by 2030, growing at a CAGR of 12.3% over the period 2022-2030.
“I would say the figure will be even bigger in some countries where we operate,” said Mattioda. Currently, the firm has a diversified loan portfolio benefitting 300,000 recipients in 14 countries, with a total value of approximately €1.14bn.
“Microfinance in a nutshell is about providing loans to micro entrepreneurs. It is not restricted to emerging markets, though the impact is different [depending on the location]. Microfinance at the end of the day is real finance, and small to medium sized entrepreneurs are the backbone of any economy. By decentralising the role of the bank, we can make microfinance even more efficient,” Mattioda said.