Santander has become the first institution to settle all sides of a bond issue using Ethereum’s public blockchain.
Securities on Public Blockchains
According to the announcement made on Sept. 12, the Spanish banking giant used tokens on Ethereum’s network to issue a $20 million debt and settle the amount with an ERC-20 token representing cash in a custody account. The transaction constitutes a landmark for public blockchains, with Santander becoming the first bank to settle both sides of a bond issue using the technology.
The successful transaction opens the door for more securities to use blockchain for issuing and settling, as opposed to the more common practice of settling cash through an analog-only ledger.
While no outside investors were involved in the transaction, Santander is commemorating the event as a hallmark for public blockchains. In addition to issuing and settling the transaction on-chain, the bank also used Santander Security Services to custody the private keys involved in the tokenized security and cash settlement.
John Whelan, head of digital investment banking at Santander’s corporate and investment bank, told CoinDesk,
It’s an evolutionary step. There are no secondary markets yet, but we are on that path.
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