Traditional financial institutions are increasingly looking at blockchain technology to improve their operations. HSBC has, for instance, set a few blockchain records in implementing the technology for different transactions. Banco Santander is a Spanish multinational bank and financial services company that has just established a new record for being the first to use blockchain technology to fully handle bond issuance.
Santander used an Ethereum token to pay the $20 million debt. He also settled the matter with ERC-20 tokens, which were used in lieu of cash in a separate custody account. This transaction shows how blockchain technology can bring new life to bond issuance. The traditional system was slower and less efficient. Even if both sides of the transaction are handled using blockchain technology, efficiency is still affected. It is a landmark achievement for the industry to use blockchain technology to handle both security issuance as well as cash settlement.
John Whelan, Santander’s digital investment head, said that:
It’s an evolutionary step. We are not yet on the path to secondary markets, but there aren’t any.
Nivaura was responsible for all digital process conversions, including settlement and initiation. This tech company is based in London. Avta Sharma, CEO of Nivaura has stated that this is a significant achievement in the industry as it is the “first truly forward to back execution process” which uses relevant data to tokenize the assets and cash.
Another example of blockchain-based bond issuance is the August sale of $33.8 million of bonds by the World Bank using a private Ethereum blockchain. Societe Generale used the Ethereum blockchain in April to issue $112,000,000 worth of bonds. This was four months before.