Siemens, a German engineering corporation, has launched its first digital bond on a public blockchain in an effort to remove middlemen and further expand its customer base.
The Europe’s biggest industrial company picked Polygon’s public mainnet as the blockchain for the bond with a due date of one year, which meets the requirements of Germany’s Electronic Securities Act.
The act, which took effect in the summer of 2021, permits the electronic issuance of securities and makes it unnecessary to issue physical certificates of ownership.
Bond issuances such as these make it easier to handle the paperwork and eliminate the need for a centralized clearinghouse, the company said in a statement. It didn’t say what the interest rate on the bonds would be.
A number of banks are investing in the digital bond initiative, including DekaBank, DZ Bank, and Union Investment. Siemens confirmed that payments for the bond were made utilizing traditional methods due to the fact that a digital euro has not yet been implemented. The transaction was processed within 48 hours, and a Polygon representative verified it took place but declined to provide further specifics, such as transaction IDs.
According to Siemens’ corporate treasurer Peter Rathgeb, the shift away from paper and toward public blockchains for issuing securities, the company can carry out transactions much faster and more effectively compared to when it issued paper bonds previously.
The German industry giant has a history of working with blockchain technology. In 2021 it joined forces with JPMorgan to design an innovative distributed ledger platform for managing payments between its bank accounts.
Sandeep Nailwal, CEO of Polygon, expressed his surprise upon learning that the network was used by Siemens. He also noted that the network, indeed, has become the core platform for institutional DeFi activity.
Digital bonds have become a hot commodity amongst Europe’s banking institutions. The European Investment Bank has already released two of these blockchain securities. In 2021, the first was activated on Ethereum, while the second one was issued onto HSBC’s tokenization platform with an additional record documented on Ethereum as well, according to press reports.
Recently, Société Générale and Santander have both released Ethereum-based bonds. In addition, Swiss bank UBS has combined blockchain technology with traditional exchanges to issue similar security. Furthermore, ABN Amro pushed things even further with its corporate bond launch on an unnamed public distributed ledger, aided by Fireblocks’ custodial services.