Announced today, on Septemeber 12, major Spanish bank Banco Santander has become the early player to issue blockchain bond on Ethereum blockchain. The bank is a significant partner of Ripple fintech startup, and with the recently released bonds on a public blockchain, Banco Santander claims itself as the first financial institution to digitized the bond issuing process on the blockchain.
Santander Issues End-to-End Bonds on Eth Blockchain
Notably, Santander isn’t a new player in the crypto industry; it was the first bank in the UK to use Ripple for real-time cross-border payments. Following the constant collaboration and relationship with Ripple, the bank is now exploring other possibilities in crypto & blockchain industry.
As per the latest release, the bank announced that it issued a tokenized $20 million bonds on the Ethereum blockchain which will continue to exist only on the blockchain.
While bond involves real money- the announcement claims that the bank itself is the issuer of the $20 million bonds wherein it carries a quarterly coupon of 1.98%. Nevertheless, the Group’s units purchased these bonds at market price.
The bond will live on the blockchain until its one-year maturity, which according to the bank – is one of the innovative aspects to explore on the blockchain. Moreover, the tokens representing cash as well as its cryptographic keys are also taken care of by Santander Securities Services.
Santander used the public Ethereum blockchain, one of the more advanced open-source blockchain technologies, the bank said in the release. The cash used to complete the investment (on-chain delivery-versus-payment) and the quarterly coupons have also been tokenized, i.e., represented digitally on the blockchain.
Blockchain Automates the Whole Process – Affirms Ripple Partner Santander
Besides, the bank believes that issuing bonds on the blockchain are the stepping stone to reach to a potential secondary market for mainstream security. It embraces the automation process, which blockchain networks follow and elaborates that it helped the bank to reduce the number of intermediaries. Specifically, it ensured the transactions are processed faster, simpler, and more efficient.
In a nutshell, it is crucial mentioning that the vital Ripple partner Santander bank has been secretly working on blockchain-bond since 2016 as a part of its blockchain lab. However, Nivaura as a London based fintech and Allen & Overy as a legal adviser were the significant players behind Santander’s latest innovative solutions that digitize and automate critical processes in capital markets.
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