ABN Amro has completed its first international blockchain-based Smart Derivative Contract (SDC) transaction.

Working in partnership with Germany's central cooperative bank DZ Bank, the Dutch bank said it used blockchain technology throughout the entire transaction lifecycle to reduce contractual risks and improve efficiency.

ABN Amro stated that trading was active for 10 days and fully automated, successfully executing settlement and collateral management based on the distributed ledger technology (DLT) used by DZ Bank.

The daily payment was processed instantly via SEPA and confirmed to the smart contract, ensuring speed and transparency throughout the entire transaction, the companies said.

ABN Amro stated that processing the payment entirely on the blockchain eliminated disputes over collateral by using market data and interest rate curves agreed upon in advance, ensuring simplified daily settlements.

“The approach is paving the way for more efficient and cost-effective operations,” the bank said.

The bank also announced that its German subsidiary, Hauck Aufhäuser Digital Custody, recently obtained a MiCAR licence, allowing it to provide cryptocurrency custody services to institutional clients under the EU’s new regulatory framework.

With the new MiCAR licence, HADC said it can manage and safeguard crypto assets on behalf of clients and will be able to offer these services through passporting in other EU member states in the future.

Yorick Naeff, head of innovation at ABN Amro, said that executing its first international over-the-counter (OTC) SDC transaction and obtaining a pan-European MiCAR licence underscores the bank's commitment to integrating digital innovation into its service offering.

“Delivering premium solutions in this area for our clients is at the heart of our growth ambitions across Europe,” Naeff added.

Matthias Bergner, head of treasury at DZ Bank, said that the move represents “a decisive step” towards establishing SDC as the industry standard for digital settlement of OTC derivatives.

“With the SDC, we are creating a blueprint for fully digital financial instruments that generate added value – in the case of the SDC, this is the reduction of counterparty risks,” he added.

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