CSD BR, a Brazilian financial-market operator responsible for more than $4 trillion in registered assets, has begun recording ownership of selected BTG Pactual investment funds on the public XRP Ledger. The regulated operator, which oversees registration, securities-depository and settlement systems in Brazil, is using the blockchain as a secondary record alongside its existing database.
The CSD BR database remains the official record for registration, custody and settlement. Fund shares held with CSD BR are being represented as tokens on the XRP Ledger in parallel, creating a dual recording system.
Streamlining Reconciliation
Banks and depositories traditionally maintain separate records of securities ownership and periodically reconcile their books against the official depository records. This matching process, known as reconciliation, is slow and costly, and discrepancies can delay trades.
By recording changes on the public XRP Ledger, approved banks and companies can verify ownership changes in real time by comparing the blockchain copy directly against CSD BR's database. All transactions on the ledger are publicly recorded, making any gaps between the two systems immediately visible.
Public Blockchain With Controlled Access
While the XRP Ledger is public and readable by anyone, CSD BR retains control over who can hold and transfer the tokens. Participants must pass standard identity and anti-money-laundering checks, and the regulator can freeze assets or reverse transactions when required by legal order.
The tokens use XRP Ledger's Multi-Purpose Token standard, which provides issuers greater control than standard cryptocurrencies allow.
Future Asset Issuance
After testing the mirroring system with live fund records, CSD BR and Ripple plan to explore issuing and trading assets directly on the ledger. Potential candidates include Brazilian real-estate receivables and agribusiness receivables, established segments of the country's fixed-income market.
Direct issuance and trading on a blockchain could enable settlement in seconds, compared to the day or longer required for traditional securities trades.
