German engineering and technology giant Siemens has become one of the first companies in Germany to issue a digital bond on a public blockchain.
- Siemens has published the first digital bond in Germany on a public blockchain in accordance with the nation’s Electronic Securities Act.
- The two-day transaction for the $64 million bond, which has a one-year maturity, was successful.
- Digital bonds, according to Siemens, are issued more quickly and effectively than conventional bonds.
Siemens, a major player in German engineering and technology, is one of the first businesses to sell a $64 million (60 million euros) digital bond to investors directly.
Germany’s First Digital Bond is Issued by Siemens
Siemens, the third-largest publicly traded business in Germany by market capitalization, declared on Tuesday that it had become the first company to issue a digital bond in Germany in accordance with the nation’s Electronic Securities Act.
Siemens can sell the bonds directly to investors by issuing them under Germany’s ESA, eliminating the requirement for any local banks to serve as a middleman. A significant “milestone in the development of digital securities in Germany,” according to Siemens, is the initiative.
DekaBank, DZ Bank, and Union Investment are a few of the bond’s investors. The bond will be issued with a one-year maturity, per the press release. There are suspicions that the Polygon Network is the unnamed public to whom the bond was issued.
Digital Bonds Are More Rapid and Effective
According to the press release, digital bonds issued on blockchains are faster and more effective than conventional bond-issuing techniques because they do not require central clearance or paper-based global certificates.
“By shifting away from paper and towards public blockchains for issuing securities, we can conduct transactions significantly faster and more efficiently than when issuing bonds in the past,” said Peter Rathgeb, corporate treasurer at Siemens AG.
Siemens is able to conduct these kinds of transactions in just two days as a result. Rathgeb claims that the digital juggernaut will keep concentrating on promoting the creation of comparable solutions with these advantages in mind.
TradeFi Is Being Replaced by Blockchain
Since 2021, Siemens has been investigating blockchain technology for payments and debt issuance. To this end, Siemens has partnered with JP Morgan Bank to create a blockchain-based system.
Money is automatically transferred between the accounts of the Munich-based company using the system created with JP Morgan Chase. Parallel to this, more reputable brands in the traditional banking sector (TradeFi) have embraced blockchain.
J.P. Morgan started utilising blockchain in 2021 to enhance money transfers. The biggest bank in Singapore, DBS Group, recently revealed ambitions to provide cryptocurrency trading in Hong Kong.
On the other hand
- Siemens did not specify an interest rate for the $64 million digital bond, despite the company’s hopes that blockchain can speed up and streamline future transactions.
Why It’s Important
Siemens wants to establish itself as a leader in the creation of digital solutions for the capital and securities markets by diving deeper into the blockchain space.
What does DeFi’s future in TradeFi hold? Read:
Is DeFi Able to Replace Conventional Finance? experts in finance weigh on
Further applications of blockchain are covered in:
How Blockchain is Transforming the Academic World
Top 12 Real-World Uses For Blockchain Technology According To Blockchain Use Cases