Siemens, the largest automation company in Europe, has issued the first public blockchain digital bond in Germany, in accordance with Germany’s Electronic Securities Act (eWpG). The bond has a maturity of one year, and it is worth €60 million. It was sold to investors, like DekaBank, DZ Bank, and Union Investment, without the need for central clearing and paper-based global certificates.
Benefits of Using a Public Blockchain
According to Siemens, the bond issued on a public blockchain offers several benefits compared to traditional processes. For instance, it eliminates the need for paper-based global certificates and central clearing, making the process more efficient. Additionally, the bond can be sold directly to investors without needing a bank to act as an intermediary. Siemens thinks that it will develop great digita solutions for the capital and securities markets with the innovative technology.
Rapid Transaction Processing and Efficiency
The use of the public blockchain enabled the transaction to be executed much faster and more efficiently than traditional bond-issuing methods.
As Peter Rathgeb, the corporate treasurer at Siemens AG, stated:
“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. Thanks to our successful cooperation with our project partners, we have reached an important milestone in the development of digital securities in Germany.”
Payment Via Classic Methods
Although the bond was issued using a public blockchain, payment for the transaction was made via classic methods as the digital euro was not yet available at the time of the transaction. However, the transaction was still completed within just two days.
Future of Digital Securities
Siemens’ successful digital bond issuance demonstrates the viability of the public blockchain in issuing securities. By utilizing this technology, the company was able to eliminate the need for traditional intermediaries and paper-based global certificates, thereby increasing efficiency and reducing transaction time. Siemens is now looking to actively drive the ongoing development of digital securities. With Germany’s Electronic Securities Act coming into effect in June 2021, it is expected that more German companies will follow in Siemens’ footsteps and issue digital bonds on public blockchains.