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China Construction Bank will issue bonds on blockchain
China Construction Bank will issue bonds on blockchain
Blockchain

China Construction Bank will issue bonds on blockchain

By Eleonora Spagnolo - 11 Nov 2020

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China Construction Bank will sell bonds on blockchain that can be paid in dollars or Bitcoin. 

This was reported in the South China Morning Post.

It is worth noting that China Construction Bank is one of the four most important commercial banks in China and, according to Forbes, the second-largest bank in the world

It is no coincidence that bonds worth a considerable $3 billion will be put up for sale.

This is the first sale of digital assets by a Chinese bank. This was made possible through a partnership with Labuan-based Fusang

The bonds will be sold as certificates of deposit. Normally these would be worth tens of thousands of dollars and therefore only accessible to institutional investors. Instead, by tokenizing them on blockchain, the bonds are also available to retail investors, who can buy small amounts, starting from $100 each. They have a duration of three months and guarantee a yield of 0.75%, more than the 0.25% usually guaranteed by banks.

China Construction Bank bonds available for trading in Bitcoin 

The other significant innovation is that these bonds can be used to trade on the Fusang exchange, which complies with the regulations of Labuan, Malaysia. Trades can be made in Bitcoin or dollars, and will start on Friday. 

The first round of the 3 billion bonds will amount to $58 million. 

The South China Morning Post explains that these bonds will not be covered by China’s deposit insurance because they are dollar bonds. 

Nevertheless, there is much expectation that they will be sold. 

The Fusang exchange hopes that a similar initiative will soon be replicated with other currencies, including the yuan and not only Bitcoin. For Felix Feng Qi, head of the China Construction Bank’s Labuan office, this issuance will narrow the gap between the fintech sector and the financial markets.

What is certain is that China seems to maintain an ambiguous attitude towards cryptocurrencies. On the one hand, it seems to want to hamper their diffusion, on the other, it allows one of its biggest banks to release a product that is somehow related to BTC.

All this while Beijing is developing its state cryptocurrency, which promises to change the industry worldwide.

Eleonora Spagnolo
Eleonora Spagnolo

Journalist passionate about the web and the digital world. She graduated with honours in Multimedia Publishing at the University La Sapienza in Rome and completed a master's degree in Web and Social Media Marketing.

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