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Trade finance startup ModulTrade has launched a crypto token sale for its blockchain-based trading platform.
The company has established a ModulTrade token (MTRc) which is based on Ethereum, at a rate of 700 MTRc to 1 Ethereum. The soft cap has been set at 5mn MTRc, with a hard cap set at 30mn MTRc. Investors in the token offering are able to buy MTRc at a discounted rate.
The MTRc will be used to provide financing to SMEs using the platform with the ModulTrade platform allowing buyers and sellers to transact using smart contracts. These smart contracts effectively replacing the traditional letter of credit in the trade cycle. The company says the platform will reduce the time and cost of trade transactions, and will allow small businesses to access finance and trading opportunities that were previously unavailable.
Evgeny Kaplin, ModulTrade CEO, tells GTR that the company reached 90% of its soft cap during a pre-sale in October, the equivalent of US$1.5mn. The former Sberbank trade financier says that interest in the venture has risen along with increased market awareness of cryptocurrency and their its potential use in trade.
The use of cryptocurrency for trade finance is rare, but is becoming more common, as soaring bitcoin prices continue to make headlines. A number of companies in Asia have been exploring the use of initial coin offerings (ICOs) or token sales as a means of raising funds for either lending in trade transactions, or for building the platforms to do so.
In July meanwhile, UK-based fintech startup Populous raised US$10mn through an ICO in just five days, to be used to fund a blockchain-based invoice financing platform.
Earlier this year, a report by research firm Autonomous found that startups had raised in total a record US$1.27bn in the first half of 2017 through ICOs, while the top four ICOs of the year, according to research firm Smith and Crown, have to date raised US$660mn between them.