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Risk factors

Most operators in this field publish only what works. This page states what this structure does not solve. It draws on the published positions of the rating agencies, the regulators and the standard setters, and on the record of the platforms that failed.

It does not improve recovery on default​

If a customer stops paying, a vehicle is repossessed, and that happens through courts and collection agencies. No platform performs it.

Every credible source says so. Maple lost 36 million dollars to a borrower default in 2022, and the conclusion drawn was that a real-world claim cannot be liquidated with a line of code. Centrifuge's own documentation notes that a write-off policy is not a liquidation policy.

Goldfinch, the closest structural precedent in on-chain private credit, wound down in June 2026 with about 56 million dollars outstanding: two of eight borrowers in default and six restructured. One transaction lost 1.9 million to a borrower who diverted funds in breach of the loan terms, and that transaction, unlike others on the platform, carried no junior capital protection.

That last detail is why this programme is structured in three classes with a funded cash reserve. Subordination answers that failure. Tokenization does not.

It does not create liquidity​

A token that can technically be transferred is not a market.

IOSCO's report on tokenization concludes that many of the promised benefits, particularly secondary market liquidity, are not being achieved, and that participants continue to prefer traditional settlement infrastructure. The OECD warns of liquidity splitting between on-chain and off-chain markets for the same asset. Electric Capital counted only two of thirty-five non-stablecoin tokenized assets above fifty million dollars that had passed two thousand holders.

Notes on this programme are transferable. No market is made in them, and none is promised.

The transfer of the receivables from the originator to the issuer is a true sale governed by contract and by law. The register records the notes. It does not perform the sale of the assets, and a design that pretended otherwise would fail the first time it met a court.

Rating agencies treat distributed ledgers this way already. When Morningstar DBRS rated Figure's blockchain-based securitization, it listed neither blockchain as a strength nor as a challenge. It rated the loans. The chain had to be invisible to the credit analysis, which means it had to break nothing the agency already cares about: data integrity, servicing continuity, transfer of title, reporting.

Three facts a European team has to plan around:

  • MiCA does not apply. Article 2(4) of the regulation expressly excludes securitisation positions from its scope. A tokenized ABS note is governed by MiFID II, the Prospectus Regulation, the Securitisation Regulation and national law on registers, not by the crypto regime.
  • The DLT Pilot Regime may not cover a tranched transaction. Its article 3 excludes bonds incorporating a structure that makes the risk hard for the client to understand. That language reads onto a tranched note, and access requires a legal opinion rather than an assumption.
  • On-chain publication does not discharge Article 7 reporting. Securitisation disclosure is an obligation to file prescribed templates with a registered repository. Publishing loan level data on chain is additive. It is not a substitute.

There is no tokenized true-sale securitization in the European Union today. Everything issued in the EU on distributed ledgers is plain debt or funds. That is the opportunity and the warning at once: no precedent to copy, and every legal question is a first instance.

The settlement asset is a compromise​

Settlement is in EURC, an electronic money token. It is not central bank money. A holder receiving it takes the issuer's credit risk and any risk to the peg. The European Central Bank is explicit that in the absence of tokenized central bank money, the seller of a tokenized security may end up holding an asset they are not comfortable with. Its Pontes work is intended to close that gap.

Status of the current programme​

The programme operates ahead of first issuance on mainnet, with a representative portfolio. It carries no credit rating, no published prospectus and no authorised issuer, and the notes are not admitted to any trading venue.

Nothing on this site is an offer to sell securities or investment advice. See status and legal.

What remains​

The claim that survives all of the above is narrow and precise. A securitization employs a calculation agent, a verification agent, a paying agent and a cash manager. Their work is expensive, slow and opaque. It can be performed by software that any party can check, with the figures published as they happen rather than six weeks later.

That is what CARA7 does. Everything else on this page is the reason to be exact about what it does not.