13/09/2019 Santander unveils $20 million bond that lives on the Ethereum blockchain
The Santander Banking Group has long been a keen experimenter with blockchain technologies, seeing the potential to automate many of the processes required to verify and guarantee financial transactions.
In 2018 it launched a blockchain-based foreign exchange service for international money transfers, including an app called One Pay FX, and now it has announced a bond that runs entirely on the Ethereum public blockchain.
The $20 million one-year bond, which will only exist on the blockchain, is a fixed income security that pays 1.89 per cent per quarter. So far it is an internal affair: Banco Santander issued the bond, it was tokenised by Santander Securities Services which is in charge of the cryptographic keys, and Santander Corporate and Investment Banking (CIB) acted as a dealer. However, the bank is hailing the new bond as a "milestone" because of its end-to-end nature. No part of its management, including the payouts, takes place outside of the blockchain, and the bond is 'permissioned', despite being on a public blockchain.
"Thanks to this automation, the one-year maturity bond has reduced the number of intermediaries required in the process, making the transaction faster, more efficient and simpler," Santander says in a press release.
Santander CIB is now looking "to engage with our most innovative clients" to move the project into production.
The project was developed in part by London-based Nivuara, a fintech startup that has been working on blockchain-based solutions for issuing of bonds, derivatives, and equities. Earlier this year Nivuara attracted funding from a group led by the London Stock Exchange Group which included Santander.
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