Spanish banking giant Banco Santander has issued the first end-to-end blockchain bond. According to the bank, they’re the first to use the technology to manage all aspects of a bond issue.
Through a press release on September 12, Santander revealed that it issued a $20 million bond directly on the public Ethereum (ETH) blockchain. It’ll remain there until the end of its one-year maturity.
Bypassing legacy systems
As per the reports, Santander issued the bond, and on the other side, one of the bank’s units purchased the bond at market price.
Santander operated as tokenization agents and custodian of the cryptographic keys by securely tokenizing the bond in a permissioned manner. On the other side, Santander Corporate and Investment Banking (CIB) acted as a dealer.
Both the money used to complete the transfer and the quarterly tokens were tokenized. As explained by John Whelan, head of digital investment banking at Santander, the (tokenized) cash was held “in escrow in a smart contract on the public Ethereum blockchain, until the issuer had underwritten the transaction and instructed the blockchain to perform the delivery versus payment.”
This can be seen as the first step towards a potential secondary market for mainstream security tokens. Santander is thus claiming to be the first to complete a digitized automated and on-chain process. Whelan talked about the issuance:
“It’s an evolutionary step. There are no secondary markets yet, but we are on that path.”
Even though Santander issued the blockchain bond to itself, the transaction was faster, more efficient and simpler than legacy systems.
Antonio Torio, head of funding at Santander, described the project as a “real-money pilot.” Reportedly, he also said that the “transaction was a plain-vanilla bond with a one-year maturity, four quarterly coupons and a standard rate of 1.98 percent.”
Noting the high degree of automation involved in the entire process, which significantly reduced the number of intermediaries required for the operation, the bank now wants to continue developing the initiative.
It seems like the bank is betting on technology. Torio commented:
“For Santander, this is really much more of a technology innovation issue than a pure financial issue. We regard this an important first step that will be followed by more complex transactions.”
But is it really novelty?
As previously reported by The Blockchain Land, the World Bank issued a similar blockchain bond last year in August. Assigned to Commonwealth Bank of Australia (CBA) and developed with the help of the software giant – Microsoft, a private version of Ethereum was used.
In April of this year, French banking giant Societe Generale issued its first covered bond as a security token on a public blockchain. The covered bond was issued on the Ethereum blockchain, and it was worth over €100 million.
I?m impressed, I have to say. Actually rarely do I encounter a weblog that?s each educative and entertaining, and let me let you know, you could have hit the nail on the head. Your thought is outstanding; the problem is one thing that not sufficient persons are speaking intelligently about. I’m very completely satisfied that I stumbled across this in my search for something relating to this.
I would love to add if you do not actually have an insurance policy or perhaps you do not remain in any group insurance, chances are you’ll well gain from seeking the help of a health insurance agent. Self-employed or those that have medical conditions typically seek the help of any health insurance brokerage service. Thanks for your text.
Wow, awesome blog structure! How lengthy have you ever been running a blog for? you make blogging glance easy. The total look of your website is fantastic, let alone the content material!
Appreciate you sharing, great blog.Really looking forward to read more. Really Great.
I like that the bulletin board offers options for both local pickup and shipping, accommodating different buyer preferences.
I’ve been absent for some time, but now I remember why I used to love this web site. Thanks , I will try and check back more often. How frequently you update your site?
Just wish to say your article is as astonishing. The clarity to your post is just cool and that i can suppose you’re knowledgeable on this subject. Fine together with your permission allow me to clutch your feed to keep up to date with forthcoming post. Thanks a million and please continue the gratifying work.
Undeniably imagine that which you said. Your favorite reason seemed to be at the net the easiest thing to take note of. I say to you, I certainly get annoyed at the same time as other folks consider worries that they plainly do not realize about. You controlled to hit the nail upon the highest and outlined out the whole thing with no need side effect , other folks could take a signal. Will probably be again to get more. Thanks
You can certainly see your skills within the work you write. The arena hopes for more passionate writers such as you who aren’t afraid to mention how they believe. All the time follow your heart.
Hi! Do you know if they make any plugins to safeguard against hackers?I’m kinda paranoid about losing everything I’ve worked hard on.Any recommendations?