Siemens’ €300 million digital bond on SWIAT blockchain settled in minutes

• Siemens issued a €300 million digital bond on SWIAT’s blockchain platform.
• The bond settled in minutes, a significant improvement from Siemens’ previous bond.
• Major German banks participated, showcasing growing interest in blockchain assets.

Germany’s tech giant Siemens has issued a €300 million digital bond, its second blockchain-based bond.

The bond, issued under Germany’s Electronic Securities Act (eWpG), is part of the European Central Bank’s (ECB) trials exploring blockchain’s potential in capital markets.

Siemens makes a breakthrough in bond tokenization

Siemens’ digital bond issuance marks a notable advancement in bond tokenization.

The €300 million bond, with a one-year maturity, was issued on the SWIAT private blockchain platform and settled in minutes. This rapid transaction time highlights a significant improvement in speed and efficiency compared to traditional methods.

In 2023, Siemens issued a €60 million blockchain-based bond on the Polygon (MATIC) blockchain that took two days to settle, making the new bond’s settlement within minutes a considerable leap forward.

The bond’s issuance process leveraged Bundesbank’s automated Trigger Solution, demonstrating how blockchain technology can streamline financial transactions.

Major German financial institutions, including BayernLB, DekaBank, DZ BANK, and Landesbank Baden-Württemberg, participated in this issuance, signalling a growing interest in blockchain-based assets among traditional financial players.

Siemens’ initiative not only supports the ECB’s trials of distributed ledger technology (DLT) but also sets a precedent for future digital securities.

Future prospects and industry impact

Siemens’ move aligns with the European Central Bank’s broader efforts to assess blockchain technology’s integration into traditional financial systems.

By issuing the bond according to the eWpG, Siemens is pioneering the use of electronic securities and reinforcing the feasibility of blockchain for capital markets. The bond’s swift settlement time, achieved through the private blockchain platform, suggests potential benefits in terms of lower costs, enhanced transparency, and greater security.

In the recent past, blockchain-based bond issuances have seen incremental adoption, with notable examples including the World Bank’s 2018 issuance and Japan’s Nomura Research Institute’s 2020 issuance.

Siemens’ latest digital bond reflects an ongoing trend toward bond tokenization, driven by blockchain technology’s promise of faster, more secure transactions.

As the industry continues to evolve, the integration of smart contracts and blockchain technology is expected to accelerate, transforming how securities are issued and traded.