Siemens has issued one of the first blockchain-based tokenized bonds in Germany. The $60 million bond deployed on the Polygon (MATIC) blockchain has a maturity of one year and can be purchased using the card and digital euro.
The company says the process of issuing digital bonds is much faster and more efficient than traditional paper-based methods.
It Offers Several Benefits To Users
On February 14, engineering and technology giant Siemens became one of the first companies in Germany to issue a blockchain-based digital bond. The $60 million bond deployed on Polygon (MATIC) network has a maturity period of one year and was issued in compliance with the country’s Electronic Securities Act.
According to the German brand, issuing a bond on a decentralized and public ledger offers several benefits, eliminating the need for paper-based global certificates and a central clearing process, and allowing for the bond to be sold directly to investors without requiring any bank or financial institution to act as an intermediary.
Siemens’ Chief Financial Officer, Ralf P. Thomas, stated that with “innovative products and technologies” supported and offered by the company to its customers, it was only logical that they test and utilize the latest digital solution that was available in the finance industry. The executive is proud that his company is one to have successfully issued a blockchain-powered bond, thereby making Siemens a pioneer in developing digital solutions for the capital and securities markets.
It has been possible to issue blockchain-based bonds in Germany ever since the Electronics Securities Act came into effect in June 2021. This allowed the tech firm to sell securities directly to customers without the help of centralized securities depositories. The euro-denominated bonds will be available for purchase by investors via traditional means, where transactions are completed within two days. Meanwhile, the digital euro will be supported by the system in the coming days.
Siemens Corporate Treasurer, Peter Rathgeb, explained that by moving towards distributed ledger technology (DLT) for issuing securities, the company has been able to execute significantly faster and more efficient transactions than what was possible when issuing paper-based bond certificates. Siemens has assigned Hauck Aufhäuser Lampe PrivatBank to act as bond registrar for transactions made on the Polygon blockchain, while DekaBank, DZ Bank, and Union Investment have invested in the bond security.
Siemens has been venturing into blockchain technology for a while now. In 2020, the German engineering firm launched Pebbles, a blockchain-based energy trading marketplace that allows private energy producers to market their electricity directly to consumers without the need for traditional grid operators.
The project is a joint initiative between power grid operators Siemens and AllgauNetz, funded by the German Federal Ministry for Economic Affairs and Energy. Similarly, in 2019, Siemens considered implementing blockchain-based solutions to its car-sharing program through its subsidiary, Siemens Mobility.
Real-world asset (RWA) tokenization, the process of representing physical and traditional financial assets like gold, stocks, and bonds, as digital tokens on a blockchain ledger is the latest trend in the digital asset industry and is turning out to be one of its fastest growing sectors this year. According to a report by global consulting firm B&C, the total value of tokenized assets globally could reach a whopping $16 trillion by 2030.
At the time of writing, MATIC is trading at $1.25 – up by 5.3% in the last 24 hours. Polygon has a total market cap of $11.23 billion.