German conglomerate Siemens has issued its first euro-denominated blockchain-based digital bond. In its announcement, the firm highlighted the benefits of using blockchain, including the opportunity to sell directly to investors.
Digital bonds issued under Germany’s Electronic Securities Act
Siemens, Europe’s largest industrial manufacturer, announced that it has become one of the first companies in Germany to issue digital bonds under the country’s Electronic Securities Act, which took effect in June 2021.
The €60 million bond ($64 million) has a one-year maturity and is based on the public blockchain, Polygon, according to crypto media reports. Siemens, which announced the deal on Tuesday, highlighted certain advantages of adopting a blockchain platform over traditional methods:
for example, it eliminates the need for paper-based global certificates and central clearing. Additionally, it allows bonds to be sold directly to investors without having banks act as intermediaries.
“By moving from paper to public blockchain for issuing securities, we can execute transactions significantly faster and more efficiently than when we issued bonds in the past,” Siemens AG corporate treasurer Peter Rathgeb is quoted as saying.
Germany’s Electronic Securities Act allows organizations to issue blockchain-based digital bonds, Siemens noted. It also states that it sells securities directly to investors without involving an established central securities depository.
“Since digital euros were not yet available at the time of the transaction, payment was made in the classical way,” the press release noted.Hauck Aufhäuser Lampe Privatbank AG served as the bond registrar for the transaction, which was completed within two days, and Union Investment, Dekabank, and DZ Bank invested in the bonds.
Siemens Vows to Lead the Development of Digital Securities in Germany
Peter Rathgeb also stated that “thanks to the successful cooperation with the project partners, we have reached an important milestone in the development of digital securities in Germany,” and that the firms will continue to be actively involved in its development, he added.
“With its innovative products and technologies, Siemens supports its customers in their digital transformation with great success. Therefore, it makes sense to test and leverage the latest digital solutions in the financial sector,” added Ralph Thomas, Chief Financial Officer of Siemens.
“We are proud to be one of the first German companies to successfully issue blockchain-based bonds. This makes Siemens a pioneer in the continuous development of digital solutions for the capital and securities markets,” the executive elaborated.
Europe has not yet comprehensively regulated its blockchain space: in 2022, Brussels and the main institutions of the member states reached an agreement on the European Union’s new crypto asset market (MiCA) legislation. the MiCA is expected to enter into force in 2023, but companies will have an additional 12 to 18 months to comply. A digital euro is currently under development.
Image Credits: Shutterstock, Pixabay, Wiki Commons, Michael715 / Shutterstock.com
