German conglomerate Siemens has for the first time issued a blockchain-based digital bond denominated in euros. In an announcement, the corporation highlighted the benefits of using blockchain, including the opportunity for direct sale to investors.
Digital Bond Issued Under Germany’s Electronic Securities Act
The largest industrial manufacturer in Europe, Siemens, announced it has become one of the first companies in Germany to issue a digital bond in accordance with the country’s Electronic Securities Act which came into force in June, 2021.
The €60-million bond ($64 million) has a maturity of one year and is based on a public blockchain, that of Polygon, according to crypto media reports. Announcing the deal on Tuesday, Siemens emphasized certain advantages of employing a blockchain platform over traditional methods:
For instance, it makes paper-based global certificates and central clearing unnecessary. What’s more, the bond can be sold directly to investors without needing a bank to function as an intermediary.
“By moving away from paper and toward public blockchains for issuing securities, we can execute transactions significantly faster and more efficiently than when issuing bonds in the past, Corporate Treasurer at Siemens AG Peter Rathgeb was quoted as stating.
Germany’s Electronic Securities Act allows organizations to issue blockchain-based digital bonds, Siemens pointed out. It also said it has sold the securities directly to investors without engaging established central securities depositories.
“Payments were made using classic methods as the digital euro was not yet available at the time of the transaction,” the press release noted. Hauck Aufhäuser Lampe Privatbank AG acted as the bond registrar for the transaction, which was completed within two days, while Union Investment, Dekabank and DZ Bank invested in the bond.
Siemens Vows to Drive the Development of Digital Securities in Germany
“Thanks to our successful cooperation with our project partners, we have reached an important milestone in the development of digital securities in Germany,” Peter Rathgeb also noted, adding that the corporation will continue to be actively involved in their development.
“With our innovative products and technologies, Siemens supports the digital transformation of its customers with great success. It is therefore only logical that we test and utilize the latest digital solutions in finance,” added Ralf Thomas, the chief financial officer of Siemens.
“We are proud to be one of the first German companies to have successfully issued a blockchain-based bond. This makes Siemens a pioneer in the ongoing development of digital solutions for the capital and securities markets,” the executive elaborated.
Europe is yet to comprehensively regulate its blockchain space. In 2022, key institutions in Brussels and member states reached an agreement on the European Union’s new Markets in Crypto Assets (MiCA) legislation. MiCA is expected to enter into force in 2023 but businesses will have another 12 to 18 months to comply with it. A digital euro is currently under development.
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