Tokenization Facilitates Investment in CPRs and CDAs

CPRs (Agribusiness Receivables Certificates) and CDAs (Agricultural Credit Deposit Certificates) are two of the most important financial instruments in agribusiness. CPRs are fixed-income securities that represent credit rights originating from financing operations in the agricultural sector. They are issued by financial institutions, development agencies, and other entities authorized by the Securities and Exchange Commission (CVM). CDAs, in turn, are another type of fixed-income security that represents credit rights from financing operations within agribusiness. Issued by banks and other financial institutions, the debtors of CDAs also include companies in the agribusiness sector, such as rural producers, cooperatives, and agribusiness industries.

Despite their immense importance, CPRs and CDAs present several inefficiencies. Obtaining financing through these instruments, for example, can be laborious and time-consuming, often requiring extensive bureaucracy and numerous intermediaries. This lack of agility delays access to the necessary funds and increases costs for producers. The liquidity of these instruments can be limited, as they are generally traded on traditional exchanges that do not always offer ideal conditions for quick and efficient transactions. Another critical point is the significant credit risk, as the payment depends on the financial stability of the debtor, which can be volatile due to the nature of the agricultural sector.

The growth of CPRs over the last three years has been impressive: according to the Agro Private Finance Bulletin, the registered outstanding values of the certificate jumped from R$170 billion in July 2022 to R$266 billion in July 2023, an increase of 57%. Despite these impressive figures, the certificates also have some downsides. They have lower liquidity compared to fixed-income securities issued by the government, and there is a credit risk, as payment depends on the debtor's repayment ability. This bureaucracy delays access to the necessary funds and increases costs for producers—this is where tokenization comes in.

The tokenization of assets facilitates access to credit for medium and small producers, allowing them to trade their receivables directly in the capital market without the need for traditional intermediaries like banks. It also reduces costs and bureaucracy, accelerating the process of obtaining resources. Furthermore, this process enables producers to diversify their funding sources beyond banks and development agencies, attracting capital from institutional and individual investors.

With tokenization, investors can invest in fractions of CPRs and CDAs, reducing the minimum investment amount and democratizing access to these assets. Trading tokens on decentralized exchanges can increase investment liquidity, allowing investors to buy and sell their tokens more easily.

Another significant advantage of tokenization is that blockchain technology ensures the transparency and traceability of token transactions, which can increase investor confidence and help producers better manage the flow of resources. Tokenization also opens doors to new business models in agribusiness, such as crowdfunding platforms to finance specific projects or the creation of loyalty tokens to reward customers. Throughout the entire process, blockchain technology ensures asset security, protecting against fraud and data manipulation. I believe this is one of the most important factors.