German conglomerate Siemens has for the first time issued a blockchain-based digital bond denominated in euros. In an announcement, the corporation highlighted the benefits of using blockchain, including the opportunity to sell directly to investors.
Digital bonds issued under the German Electronic Securities Act
Europe’s largest industrial manufacturer, Siemens, announced that it has become one of the first companies in Germany to issue a digital bond pursuant to the country’s Electronic Securities Law, which came into force in June 2021.
The €60 million ($64 million) bond has a one-year maturity and is based on a public blockchain, Polygon’s, according to crypto media reports. Announcing the deal on Tuesday, Siemens emphasized certain advantages of employing a blockchain platform over traditional methods:
For example, it makes paper global certificates and central clearing unnecessary. In addition, the bond can be sold directly to investors without the need for a bank to act 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,” said Siemens AG corporate treasurer Peter Rathgeb.
Germany’s Electronic Securities Act allows organizations to issue blockchain-based digital bonds, Siemens noted. It also said it has sold the securities directly to investors without involving established central securities depositories.
“Payments were made using classical methods as the digital euro was not yet available at the time of the transaction,” the press release noted. Hauck Aufhäuser Lampe Privatbank AG acted as bond registrar for the transaction, which was completed in two days, while Union Investment, Dekabank and DZ Bank invested in the bond.
Siemens is committed to driving the development of digital assets in Germany
“Thanks to our successful cooperation with our project partners, we have reached an important milestone in the development of digital values in Germany,” Peter Rathgeb also noted, adding that the corporation will continue to be actively involved in their development.
“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 of 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 continuous development of digital solutions for the capital and securities markets”, explained the executive.
Europe has yet to comprehensively regulate its blockchain space. In 2022, key institutions in Brussels and member states reached an agreement on the new European Union Crypto Asset Markets (Mica) legislation. MiCA is expected to go into effect in 2023, but companies will have another 12 to 18 months to comply. A digital euro is currently being developed.
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