The Santander banking group has announced the launch of a bond issued on the Ethereum blockchain.
This is a $20 million bond, the first to be issued on the blockchain.
It is an end-to-end blockchain bond and is the first step towards a potential secondary market for future security tokens.
The issuer of the bond is Banco Santander itself, whereas the buyer is one of the companies in the Group. The bond has a quarterly coupon rate of 1.98%.
The body that has dealt with the tokenisation and custody of the cryptographic keys is Santander Securities Services, while Santander Corporate and Investment Banking (CIB) is the official reseller.
For this project, Santander approached London-based startup Nivaura, a regulated fintech company that develops innovative solutions to digitalise and automate key processes in the capital markets and in which Santander InnoVentures venture capital fund invested $200 million in February.
In addition, they also sought legal advice from global law firm Allen & Overy.
The aim of this is to make the issuance of bonds faster, more efficient and easier.
The blockchain of choice is the public one of Ethereum, called “one of the more advanced open source blockchain technologies” for “tokenizing the bond securely“.
Even the purchase payment and quarterly coupon rates have been tokenised, i.e. digitally represented on the blockchain.
As a result, deadlines need fewer intermediaries to be managed, making transactions faster, more efficient and easier.
Now that this test has been carried out, Santander CIB is ready to interact with its most innovative customers by moving from the development phase of the project to the market-ready end product.
Banco Santander’s financial director, José García Cantera, said:
“Santander is at the forefront of the profound digital transformation of the financial sector and this transaction is one example. We want to take advantage of any technology that can accelerate that process, so that our customers thrive and be faster and more efficient, and blockchain is one of those technologies”.
Santander Corporate & Investment Banking’s global head, José María Linares, added:
“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”.