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Sunday 20 October 2019

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Santander launches end-to-end blockchain bond

Written by Hannah McGrath
12/09/2019

Banco Santander has become the first lender to launch an end-to-end blockchain bond.

The Spanish-headquartered bank said the launch of the $20 million bond marks the arrival of a disruptive new technology which has the potential to make issuing bonds faster, simpler and more efficient.

The bond was issued directly onto the public Ethereum blockchain and will remain on the platform until maturity, making it Santander’s first end-to-end bond using the technology.

The bank said this allowed it to tokenise - or digitally represent - the bond securely and register it in a permissioned manner on the blockchain. The cash used to complete the investment (on-chain delivery-versus-payment) and the quarterly coupons have also been tokenised.

Santander said the successful issuance of the asset represents a first step towards a potential secondary market for mainstream security tokens in the future. It received support from London-based startup Nivaura, a company which builds solutions for digitising and automating key processes in capital markets.

Santander Securities Services is acting as tokenisation agent and custodian of the bond’s cryptographic keys, while Santander Corporate and Investment Banking, the bank’s global division that supports corporate and institutional clients, acted as dealer for the issuance.

The issuance marks the culmination of a development process started in Santander’s blockchain lab in 2016.

José María Linares, global head of Santander Corporate and Investment Banking, said: “Our clients are increasingly demanding the best thinking and technology in how we serve them in their capital-raising efforts.

“This blockchain-issued bond puts Santander at the forefront of capital markets innovation and demonstrates to clients that we are the best partner to support them on their digital journey.”



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