In simpler terms, the OCBC Bank in Singapore has introduced a system powered by blockchain technology that lets companies purchase shares of tokenized bonds, which is a change in the way corporate treasuries are handled.
Investors recognized by the bank, who possess more than S$10 million ($7.3 million) in assets, now have the opportunity to buy bond units for as little as S$1,000 – a substantial decrease from the standard minimum of S$250,000, as reported by Ledger Insights.
The novel approach offers investors the flexibility to adjust bond maturity periods and interest rates (coupon rates). These digital bonds mirror established top-tier financial assets, thereby giving corporate clients access to bespoke and readily tradable investment opportunities.
For example, a medium-sized construction company recently took advantage of this service to expand their investment options for their treasury, going beyond just fixed deposits. According to Ledger Insights, this was the case.
The processing time for transactions has significantly reduced, moving from the standard five days down to a single day now.
This new endeavor is an expansion of OCBC’s past blockchain ventures. In the year 2023, the bank collaborated with ADDX for structured product releases and launched a payment solution that leverages blockchain technology conditionally. This system streamlined automatic payments for the Land Transport Authority, handling approximately S$22 million in transactions by the end of 2024.
Global banks and tokenization
Major financial institutions worldwide are venturing into tokenization for monetary transactions. Last autumn, the Reserve Bank of Australia initiated a discussion regarding Project Acacia – a three-year undertaking investigating the feasibility of central bank digital currency in wholesale banking and tokenized marketplaces.
The project invited public opinions about the possible advantages of turning assets into tokens and utilizing Central Bank Digital Currencies (CBDCs) for transactions.
Moreover, it’s worth noting that in June 2024, the German government-owned bank, Kreditanstalt fuer Wiederaufbau, initiated the utilization of blockchain technology by issuing their inaugural digital bond.
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2025-01-07 17:42