Leading German Conglomerate Siemens has issued the first ever digital bond in euros based on blockchain technology. The company’s announcement highlighted the advantages of using the blockchain and the capability of providing it to traders.
Digital Bond Within Limits of German Electronic Securities Act
Europe’s biggest industrial company, Siemens, has been in existence since 1847 and is now one of the first businesses in the country to issue a blockchain-based digital bond based on the German Electronic Securities Act, which came into force in June 2021.
The €60 million ($64 million) bond has a one-year maturity and is based on the public blockchain, Polygon. According to crypto media reports, the announcement on Tuesday by Siemens highlighted the various benefits of using a blockchain platform compared to traditional methods.
For instance, the need for central clearing and paper-based international certificates is eliminated. Furthermore, traders are able to purchase the bond without the need for a financial institution acting as an intermediary.
“By moving away from paper and using public blockchains for the issuance of securities, we can execute transactions significantly faster and more efficiently than when we issued bonds in the past,” Siemens AG treasurer Peter Rathgeb said.
The German Electronic Securities Act allows businesses to issue digital bonds based on blockchain technology, such as Siemens. In addition, the company stated that the securities were purchased by traders without the involvement of central securities depositories.
“Payments were made using classic methods as the digital euro was not yet available at the time of the transaction,” the announcement noted. Hauck Aufhäuser Lampe Privatbank AG acted as the bond’s registrar, and the entire process was completed in just two days. Union Investment, Dekabank, and DZ Bank were able to invest in the bond.
Siemens Dedicated to Promoting Digital Assets in Germany
“Thanks to our successful collaboration with our project partners, we have achieved an important milestone in the development of digital assets in Germany,” Peter Rathgeb said. The company also expressed its commitment to continuing progress.
“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 use the latest digital solutions in finance,” added Ralf Thomas, CFO at 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,” he concluded.
Europe still has to fully regulate its blockchain space. In 2022, key institutions in Brussels reached a settlement between the member states and the new European Union Markets in Crypto Assets (MiCA) regulations. MiCA will become effective in 2023, but companies have an additional 12-18 months to comply. Currently, a digital euro is under development.
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