More traditional financial institutions are consistently looking into the application of blockchain technology for several of their functions. HSBC, for example, has set a few new blockchain records with implementing the technology for various transactions. Now, Spanish multinational commercial bank and financial services company, Banco Santander, has just set a new record as the first institution to completely handle bond issuance, using blockchain technology.
Santander successfully used an Ethereum token for the $20 million debt and also completed the settlement with ERC-20 tokens which was used in place of cash available in a separate custody account. The significance of such a transaction is the breath of fresh air blockchain technology brings to bond issuance. Traditionally, the system is lot slower and less efficient and even if one side of the transaction is handled with blockchain and the other is not, efficiency is still greatly affected. Handling both the security issuance and the cash settlement using blockchain technology is a milestone achievement in the industry.
According to Santander’s head of digital investment, John Whelan:
“It’s an evolutionary step. There are no secondary markets yet, but we are on that path.”
The entire digital process conversion for the initiation and settlement was handled by Nivaura, a tech firm based in London. Avta Sehra, the CEO of Nivaura, has said that this achievement is an important record in the industry because it’s the “first truly front to back execution process, which securely uses relevant data to tokenize both the assets and cash.”
Other cases of bond issuance using blockchain technology include the World Bank’s use of a private Ethereum blockchain to sell $33.8 million worth of bonds back in August. About four months earlier, in April, Societe Generale also used the Ethereum blockchain to issue $112 million worth of bonds.
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