Commonwealth Bank of Australia has issued a «cryptobond» using its capital markets blockchain platform. It is the first blockchain bond issuance by a government entity both in Australia and in the world.
The transaction marks the first trial of Commonwealth Bank’s (CBA) private, permissioned blockchain platform for the end-to-end issuance of bonds.
Queensland Treasury Corporation (QTC) successfully used the blockchain to generate a bond tender, view investor bids in real time, finalise investment allocation and settle instantly with investors. QTC acted in both the issuer and investor role to test the end-to-end process for the issuance.
Innovation Lab
The QTC bond was created in digital form using smart contract technology, and has the ability to automatically pay coupons to the current holder when due.
The bond is a working prototype, is not tradable and does not carry any debt obligation.
Streamlines Issuance Process
CBA's dedicated blockchain team developed the blockchain prototype in the Innovation Lab, in conjunction with the Institutional Banking & Markets’ debt markets team and its clients.
The use of a decentralised digital ledger for a bond streamlines the issuance process, optimising the transparency of price and demand discovery during the bond’s bookbuilding process.
The blockchain platform also simplifies the bond settlement process by acting as both the bond register and payment platform, consolidating the investors’ payment and the issuers’ title transfer into a single, instant transaction.
«Blockchain technologies will significantly alter capital markets dynamics, with increased efficiency having positive impacts on risk, cost and transparency,» said Sophie Gilder (left), Head of Blockchain at CBA.
