Black Opal's GemStone offers institutional investment opportunities in the Brazilian bond market

Emerging market financial infrastructure is accelerating its transformation. On-chain asset management platform BlackOpal recently introduced new investment opportunities in the Brazilian bond market through the GemStone platform. Notably, this solution offers an annual return of 13% for institutional investors and is an attempt to fully open Brazil’s $100 billion credit card bond market.

Transforming Credit Card Bonds into Tokenized Assets

The core of GemStone is simple yet innovative. Brazilian merchants waiting for credit card payments are purchased by BlackOpal at a discounted price, and then tokenized using the Plume Network blockchain. This reimagines traditional asset securitization with blockchain technology, simultaneously meeting the needs of merchants requiring financing and institutional investors seeking returns.

Brazil’s credit card payment structure is unique. About 70% of transactions are split payments up to 12 months, requiring merchants to wait long periods for deposits. GemStone turned this structural issue into an opportunity. Merchants can receive immediate cash at 95 cents per dollar, with the remaining 5 cents’ profit serving as returns for investors.

Immediate Cash at 95 Cents per Dollar, Solving Merchant Funding Difficulties

This transaction is designed under a legal structure called ‘True Sale.’ It involves merchants fully transferring ownership, rights, and risks of credit card bonds to BlackOpal, relieving merchants of further responsibility for the bonds. Ownership is locked in the C3 registry of the Central Bank of Brazil, ensuring legal clarity and stability.

BlackOpal CEO Jason Dehni emphasized the stability of this structure. “We do not perform credit checks on merchants. We do not bear credit risk. We purchase genuine bonds settled through Visa and Mastercard networks, with ownership locked at the central bank level,” he explained.

13% Annual Return, a New Revenue Opportunity for Institutional Investors

Token buyers can earn an annual return of 13%. This figure is in USD and includes currency hedging, with the key point being that credit card companies compensate for customer delinquencies. Comparing this to the US 10-year Treasury yield of 4.2%, the attractiveness becomes clear. It means earning more than triple the yield of low-inflation, low-default, and stable currency emerging market assets.

The reason the Brazilian bond market is attracting attention is not only the potential returns but also the transaction stability. Whether recovery occurs is not the issue; only when it occurs matters. This meets the basic criteria for institutional-grade emerging market investment products.

$200 Million Investment by Mars Capital Advisors Secures Market Confidence

The launch of GemStone was made possible by strong financial backing from Mars Capital Advisors, a company specializing in working capital solutions. Mars committed to investing $200 million over three years and currently manages assets worth $2 billion.

Mars Capital Advisors CEO Rick Pierson stated, “Brazil’s credit card receivables are a large, highly liquid asset class, yet they have not received sufficient interest from institutional capital,” and expressed expectations that “GemStone will change that.” This suggests that Brazil’s bond market has been undervalued but can turn into a significant opportunity through proper structuring and technology.

Bond Innovation in Brazil’s Emerging Markets

The emergence of the GemStone platform exemplifies the expansion of tokenization in emerging markets. It reflects a trend shifting from traditional government bonds to economic assets like credit card receivables.

Brazil already has a thriving real estate tokenization market, and the Central Bank’s DREX digital currency project is creating a regulatory environment conducive to innovative products like GemStone. Draupnir Capital, a consultancy specializing in institutional private credit and the Web3 economy, participated as the sole weekly advisor for this transaction, further enhancing market structural confidence.

As Brazil’s credit card bond market begins to attract institutional investors, a reevaluation of emerging market credit is underway. BlackOpal’s GemStone is not just a financial product but a concrete example of how blockchain technology can address structural inefficiencies in traditional finance.