What is digital fixed income? Understand tokenized investments

Source: PortaldoBitcoin Original Title: What is digital fixed income? Understand tokenized investments Original Link: Fixed income has always been the realm of predictability, but not necessarily of innovation. That is changing. In recent years, the market has accelerated process digitization, gained new platforms, increased competition in bond distribution, and started to coexist with a technological agenda that has moved from the laboratory to reaching investors.

At the center of this transformation are digital solutions that use blockchain and tokenization to record, transfer, and settle assets with new layers of automation and traceability.

The background helps explain why this topic has grown: fixed income remains the backbone of the global financial system. Estimates from the US Securities Industry and Financial Markets Association (SIFMA) indicate that global fixed income markets totaled approximately US$ 145.1 trillion in 2024.

Similarly, reports from the Bank for International Settlements (BIS) show that the total outstanding debt securities exceeded US$ 150 trillion at the end of 2024, reflecting the weight of debt financing worldwide. Within such a vast ocean, any efficiency gains—whether in costs, settlement, or infrastructure—become a relevant debate.

In Brazil, numbers show the market’s growth potential. The Brazilian Association of Financial and Capital Market Entities (Anbima) estimates that retail investments reached R$ 7.9 trillion in 2025, with a focus on fixed income products and instruments benefited by incentives.

What is digital fixed income?

Digital fixed income is the issuance, registration, and trading of fixed income assets on digital infrastructure, often through tokenization, that is, the digital representation of a security (and its economic rights) on a network capable of recording ownership and transfers with traceability.

Instead of relying solely on traditional flows, the asset can originate and circulate in systems based on distributed ledger technologies (DLT), such as known blockchains, with the possibility of integration with custodians, platforms, and automated settlement mechanisms.

In practice, this means that the “DNA” of fixed income remains unchanged, such as credit risk, maturity, indexer, payment rules, but the way of operating can change: more transparent registration, more efficient transfer, automation of events, and in some models, greater flexibility for fractionalization and distribution.

How does digital fixed income work in practice

The process begins with structuring the product by an issuer (or securitization vehicle) and defining the bond’s rules: remuneration, maturity, redemption conditions, guarantees, and events.

These rules are then reflected in the digital environment, where ownership can be represented by tokens, and transactions leave verifiable traces in the system.

A sign of maturity in the topic is that issuances and operations of this kind have ceased to be restricted to “proofs of concept.” In international markets, the European Investment Bank (EIB) issued a €100 million digital bond, maturing in 2027, in initiatives connected to experiments with settlement using central bank money in wholesale.

More recently, a traditional financial institution structured a short-term bond for Galaxy Digital on the Solana blockchain, with a compliance platform among buyers, exemplifying a transaction that brings together traditional banks and native digital players.

What products can exist in digital fixed income

Digital fixed income can appear as both a “tokenized version” of familiar instruments and as new structures designed to work better in digital environments, with fractionalization, automated rules, and more flexible trading windows.

In practice, it’s common to see assets backed by already contemplated or performed consortium quotas, where the token represents receivables, and the investor participates in the cash flow with predictability, as well as structures linked to court-ordered bonds, which originate from debts of the public sector recognized judicially and usually have payments tied to government schedules and inflation indexations, changing the profile of maturity and perceived risk.

Another recurring family involves receivables and credit rights, where the collateral comes from payment flows of companies, approaching the concept already known in traditional markets through advance operations and securitization, but with digital representation and distribution in smaller units.

Tokens backed by energy contracts also appear, where the asset represents part of a marketing contract with predefined volume and price, and the investor participates in the flow associated with that contract; and in the real sector, there are offerings linked to real estate, backed by sales and leasing contracts, with different structures, from operations with residential properties to already delivered commercial properties, such as logistics warehouses.

Beyond these examples, digital fixed income may include tokenized corporate debt (such as commercial notes or debentures in digital format), structured operations with specific guarantees (for example, receivables portfolios segmented by sector), and even products inspired by foreign markets that gained traction in recent cycles, such as instruments backed by international government bonds (like “tokenized Treasuries”), and solutions that function as “digital cash,” always remembering that the technological label does not replace classic credit analysis, structure, guarantees, liquidity, and issuer governance.

Advantages of digital fixed income

The main advantage of digital fixed income is efficiency: reducing friction in registration, reconciliation, and settlement, as well as increasing traceability. Depending on the design, automation also provides gains: interest payments, amortizations, and events can be scheduled to occur according to predefined rules.

Another advantage often seen is democratization through fractionalization and broader distribution. In the tokenized world, the logic of digital units facilitates creating products that represent traditional assets in smaller fractions, which can aid diversification and access, provided costs and product structure make sense.

Risks and disadvantages of digital fixed income

Technology does not eliminate the core risk of this type of investment: credit risk. A digital security remains a security, and if the issuer defaults, blockchain alone does not solve the problem. What may change is the operational trail and governance of the record.

Additionally, specific risks arise: technological risk (failures, bugs, attacks), operational risk (digital custody, keys, access), and regulatory risk (evolving standards, registration requirements, suitability, and taxation). A practical and decisive point is liquidity. A digital secondary market only functions if there are participants and depth; otherwise, the investor may be stuck with the maturity despite the modern “visual.”

Digital fixed income vs. traditional fixed income: what changes?

At its core, traditional fixed income already operates with robust custody and settlement mechanisms and remains the foundation of financial assets. Digital fixed income aims to improve infrastructure and open new distribution and automation models, but it is still small compared to the total market.

To put it into perspective, public panels tracking the “real-world asset” tokenization market indicate figures in the tens of billions of dollars in tokenized assets. It is relevant and growing, but still a very small fraction compared to a global fixed income market measured in tens of trillions of dollars.

In the end, digital fixed income tends to make more sense when it delivers tangible benefits, such as access, cost, transparency, operational efficiency, and when the investor clearly understands what they are buying: who is the issuer, what is the collateral, what guarantees exist, how custody works, and what the actual liquidity is. Technology can improve processes and infrastructure, but the quality of the investment still depends on the fundamentals.