Santander, the Spanish banking giant, announced the launch of the first blockchain bond on the ethereum blockchain from start to finish. Santander launches $20 million ethereum based blockchain bond.
The company itself is the issuer of the $20 million bonds. While one of the Group units purchased the bond at the market price. However, the bond holds a quarterly coupon of 1.98 percent.
The bank released the bond directly on the blockchain, and the bond will continue to exist only on the blockchain. According to Santander, this is the first step towards a potential secondary market for mainstream security tokens in the future.
The bank revealed that Santander Securities was responsible for the tokenization, and acts as custodian of the cryptographic keys. Santander Corporate and Investment Banking [CIB] was the dealer for the issuance.
Ethereum’s public blockchain allows Santander to securely tokenize the bond and register it on the blockchain in an authorized manner.
The funds used for investment and quarterly coupons have also been tokenized, i.e. digitally represented on the blockchain.
José García Cantera, a chief financial officer at Banco Santander, said:
“Santander is at the forefront of the profound digital transformation of the financial sector and this transaction is one example. We want to take advantage of any technology that can accelerate that process so that our customers thrive and be faster and more efficient, and blockchain is one of those technologies.”
Santander launches $20 million ethereum based blockchain bond. The amount of intermediaries needed in the process has been decreased, making the transaction quicker, more productive and more manageable, the press release mentioned.
However, José María Linares, global head of Santander Corporate and Investment Banking, said:
“Our clients are increasingly demanding the best thinking and technology in how we serve them in their capital-raising efforts. This blockchain-issued bond puts Santander at the forefront of capital markets innovation. Also, demonstrates to clients that we are the best partner to support them on their digital journey.”
The bank further added that it had got assistance from Nivaura, a regulated fintech company based in London, as well as legal advice from Allen & Overy, a global law firm.