DeFi Technologies Inc. (Nasdaq: DEFT) is teaming up with SovFi Inc. to tackle one of the world’s largest financial challenges: sovereign debt exceeding $100 trillion. The collaboration introduces a framework for capital-appreciating, principal-protected sovereign instruments, blending traditional bonds with digital asset accrual, including Bitcoin.

A New Class of Sovereign Finance

SovFi’s patent-pending structure converts bond coupon payments into Bitcoin inside regulated exchange-traded products issued through Valour, DeFi Technologies’ ETP platform. Investors retain their bond principal while the accrued digital asset offers potential upside. At maturity, the combined bond principal and accrued Bitcoin value aim to deliver higher returns than traditional sovereign bonds.

The SovFi framework targets three main product tracks:

• Capital Appreciation Sovereign Debt Instrument: Wraps benchmark sovereign and multilateral development bonds with accruing digital asset coupons.
• Foreign Direct Investment Bridge Instruments: Cross-listed products designed to channel high-capital regions into liquid, risk-mitigated sovereign assets.
• Commodity Underlying ETP Instruments: Provides yield on sovereign-backed commodities like gold while deepening debt market liquidity.

The platform integrates issuance, liquidity, analytics, and secure settlement via Valour, Stillman Digital, Reflexivity Research, and BTQ Technologies, creating a seamless digital-native pathway for institutional investors and sovereign treasuries.

Economics and Market Impact

Illustrative models show SovFi instruments delivering multiples of traditional bond returns—for example, a 2018 seven-year bond could produce a 5.8x gain compared to standard coupon income, while simultaneously generating revenue streams through bond sleeve fees, Bitcoin sleeve fees, and staking income.

Olivier Roussy Newton, CEO of DeFi Technologies, emphasized the innovation: “The SovFi framework adds capital appreciation to rated bond exposure while preserving principal, creating a clear pathway for countries and investors to participate in a more efficient, market-driven sovereign finance system.”

Andrew Forson, President of DeFi Technologies, added, “This is a once-in-a-generation innovation, bringing sovereign debt into the digital era with instruments that preserve principal and potentially appreciate over time.”

The Bigger Picture

By integrating digital assets with traditional sovereign instruments, DeFi Technologies and SovFi aim to offer governments a new tool to manage national debt while attracting foreign investment. The initiative opens institutional channels to pensions, insurers, banks, and asset managers, potentially reshaping how sovereign finance operates in the digital age.

DeFi Technologies will showcase the SovFi framework during the DeFi Insights Symposium on September 25, 2025, in Frankfurt, with a subsequent shareholder call planned to discuss adoption, timelines, and additional innovations.