Siemens Tokenizes And Fractionalizes €60m Bond On Polygon
Milestone Date: February 14, 2023
German manufacturing giant Siemens used the Polygon public distributed ledger to tokenize a €60m bond that was fractionalized for the benefit of at least three institutional investors: DekaBank, DZ Bank, and Union Investment.
Blockchain-based tokenization of bonds and other securities enables both issuers and investors to leverage the benefits of distributed ledger technology that are not readily available through legacy investment channels. For example, with fewer intermediaries involved (which amounts to less business process friction and cost), coupon payments to bond investors can be automated with smart contracts, and, akin to OTC trading, fractionalized shares in tokenized securities are more easily remarketed to other blockchain account holders.
Whereas tokenization of bonds appears to disintermediate the role of traditional bond custodians, it gives birth to new business opportunities including third-party custodianship of a bond issuer’s blockchain account keys (to insulate potential bondholders from issuer malfeasance).
By Elizabeth Morrison
Published:April 20, 2023