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World’s First Zero-Fiat ‘Bitcoin Bond’ Now Available on Bloomberg Terminal

Argento and LBX say their regulated product is unique in not involving fiat at any stage.

Two European companies have launched what they describe as the world’s first genuine bitcoin (BTC) bond, they confirmed in a joint press release on July 3. 

Luxembourg-based Argento, a securitization firm, joined forces with London Block Exchange (LBX) to issue the bitcoin-denominated bond, which is regulated under the United Kingdom’s regulator, the Financial Conduct Authority (FCA).

“We are thrilled to have structured and produced the world’s first institutional grade bitcoin-denominated financial product,” Argento manager Phil Millo commented. 

“The large investment banks really dropped the ball on this one.”

The Argento-LBX bond represents a first in regulated cryptocurrency products, in that it contains no fiat exposure for investors. It is readily available via Bloomberg Terminal, and is the first crypto product to have its own ISIN code. 

Various durations are available, Argento conspicuously naming them after crypto-specific phenomena such as ‘FOMO,’ ‘HODL’ and ‘MOON.’

HODLers, LBX says, form one of the bond’s major target markets.

“This is an excellent product for people who currently hold bitcoin and aren’t planning to sell over the next few years…,” CEO Benjamin Davies added. 

“Now, for the first time, they have an institutional grade way of making their wallets grow without exposing their bitcoin to the swings of the traditional ‘fiat’ currency markets.”

Previously, the governments of several developing nations had told the International Monetary Fund (IMF) that they were keen on issuing bonds tied to bitcoin.

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JPMorgan Will Pilot ‘JPM Coin’ Stablecoin by End of 2019: Report

JPMorgan’s exec revealed that the bank has seen interest from global clients potentially using JPM Coin in bond transactions.

The United States’ largest bank, JPMorgan Chase (JPM), is expecting to pilot its own cryptocurrency JPM Coin by the end of 2019, according to a Bloomberg report on June 25.

Umar Farooq, head of digital treasury services and blockchain at JPMorgan, has revealed the company’s intention to launch pilot testing of JPM Coin with selected clients “around the end of the year” in case if relevant regulators approve the bank to do so.

According to Farooq, JPMorgan has seen an increased interest from global customers in the potential benefits of the bank’s stablecoin project JPM Coin revealed in mid-February 2019. Specifically, JPMorgan clients in the U.S., Europe, and Japan have expressed interest to learn about JPM Coin’s capabilities in speeding up securities and bond transactions.

In this regard, Farooq stated that the bank’s stablecoin has a potential to enable “instant” delivery of bonds via blockchain. The JPM’s executive has also revealed the bank’s positive stance on tokenized and digital securities, predicting that a number of stocks will become digital in five to 20 years. Speaking in an interview in Tokyo, Farooq said:

“We believe that a lot of securities over time, in five to 20 years, will increasingly become digital or get tokenized.”

In the recent interview, Farooq has reiterated his optimistic stance towards blockchain tech, after claiming previously that blockchain applications are “frankly quite endless.”

Recently, JPM’s managing director of global market strategy revealed that the bank believes that the bitcoin (BTC) industry has changed since 2017 due to impact from institutional investors.

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World Bank Leads Secondary Market Phase of Bond-I Blockchain Bond

A three-way partnership saw secondary market trading go live, which participants say marks a world first.

The World Bank and Commonwealth Bank have successfully enabled secondary market trading of a blockchain bond, the institutions confirmed in a press release on May 15.

The bond, known as bond-i, uses the Ethereum (ETH) blockchain and was the first in the world to leverage the technology fully when it debuted in August last year.

Now, a three-way partnership which also included market maker TD Securities delivered what the participants consider a similar first and a further metamorphosis for blockchain bonds.

“Enabling secondary trading recorded on the blockchain is a tremendous step forward towards enabling capital markets to leverage distributed ledger technologies for faster, more efficient, and more secure transactions,” the World Bank’s vice president and treasurer, Jingdong Hua, commented in the press release. He added:

“It speaks to the innovation and commitment of all our partners, including investors, that we were able to achieve this together.”

The achievement comes just weeks after French credit institution Societe Generale launched a €100 million euro ($112 million) bond on Ethereum, while the idea of blockchain bonds continues to extend beyond the banking sector.

As Cointelegraph reported, the governments of three developing economies themselves told the World Bank during one of its hosted events in April that they even wished to issue a bitcoin (BTC) bond.

“Blockchain has the potential to streamline processes for raising capital and trading securities, improve operational efficiencies, and enhance regulatory oversight,” Commonwealth Bank’s head of experimentation & commercialisation, Sophie Gilder, added.

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Germany Plans Major Digital Token Regulation Effort in 2019, Says Source

A government representative has revealed a draft bill could land in parliament before the summer recess.

Germany plans to introduce draft regulations allowing blockchain bonds as soon as this summer, local daily business news outlet Handelsblatt reported May 9.

Citing Thomas Heilmann, the ruling coalition government’s dedicated blockchain correspondent, the publication revealed the new legislation has already gained mainstream momentum, with a summary paper already in existence.

According to Heilmann, it is both necessary and advantageous for Germany to embrace blockchain with supportive regulation.

“We consider it to be of paramount importance that we bring blockchain technology forward for Germany, specifically in 2019,” Handelsblatt quoted him as saying.

Germany has traditionally taken a conservative stance on both blockchain and cryptocurrency, with the country showing itself to be wary of bitcoin (BTC) and other tokens in particular.

That situation has more recently begun to change, as authorities become aware of evolving trends.

The current legal changes center on the idea of tokenizing processes currently done on paper, while enshrining blockchain token legality would prevent issues arising from them languishing in a regulatory gray area.

“The national government has finally woken up,” Frank Schaeffler, the blockchain expert for Germany’s Free Democratic Party, continued. He added:

“Now things need to move fast. Crypto issuers and investors are looking for a regulated financial marketplace for their activities which we can present on the international stage. Germany has the chance to adopt a key position here.”

Last month, nearby Liechtenstein, which like neighboring Switzerland has become known for its pro-crypto stance, rolled out blockchain bonds for the real estate sector. And this week, the country passed new regulation concerning tokenization and blockchain regulation.

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Belarussian Exchange to Offer Tokenized Government Bonds

Global exchange website Currency.com has announced that it will be offering a tokenized form of Belarussian government bonds.

The global exchange website Currency.com has announced that it will be offering a tokenized form of Belarussian government bonds, according to a press release on May 7.

According to the press release, users can now use fiat money or cryptocurrencies bitcoin (BTC) and ether (ETH) to invest in and trade Belarussian government bonds. Belarussian-based company Currency Com Bel LLC is reportedly the first organization to tokenize government bonds.

As is the case with other cryptocurrencies such as bitcoin, investors will be able to purchase fractional amounts of the new token. Initially, these tokens are being offered on the exchange at $1,000 per token; a token will represent one bond, and there will initially be 252 bonds with a 4.2% per anuum yield introduced to the exchange.

Co-Founder of Currency.com Viktor Prokopenya credits a piece of Belarussian legislation in 2018, Decree No. 8, which provided clear guidelines for the blockchain industry. Prokopenya said:

“All this was made possible by the progressive Decree No. 8 ‘On the Development of a Digital Economy’ that was ratified in Belarus in 2018, affirming the country’s commitment to playing a big role in the next chapter of the technological revolution.”

In a previous report by Cointelegraph, the national bank Oesterreichische Kontrollbank (OeKB) issued $1.35 billion worth of government bonds on behalf of the Austrian Treasury on the Ethereum public blockchain in an auction during September 2018.

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Societe Generale Subsidiary Issues 100 Million Euro Bond on Ethereum Blockchain

French specialized credit institution Societe Generale SFH has issued a 100 million euro bond as a security token on the Ethereum blockchain.

French specialized credit institution Societe Generale SFH issued a 100 million euro ($112 million) bond as a security token on the Ethereum (ETH) blockchain. The company announced the development on its website on April 23.

Societe Generale SFH —  which is a subsidiary of one of Europe’s largest financial services groups, Societe Generale Group —  has rolled out its first pilot project developed in collaboration with Societe Generale FORGE. The latter is an internal startup launched through the Group’s intrapreneurial program, the Internal Startup Call.

The transaction’s goal was to investigate a more efficient way for bond issuance, which would potentially facilitate better transparency, and faster transferability and settlement. The company says in the announcement that the product “proposes a new standard for issuances and secondary market bond trading and reduces cost and the number of intermediaries.”

Last September, Societe Generale became one of the major financial organizations that  launched a joint venture dubbed komgo SA to oversee a new blockchain-based platform for financing the trading of commodities.

The venture aims to digitize trade and commodities finance processes through a blockchain-based open platform, and was developed in partnership with the Ethereum-focused blockchain infrastructure and solutions group ConsenSys.

Earlier in April, Private bank Kleinwort Hambros, which is owned by Societe Generale, launched an exchange-traded note made up of blockchain-related companies. The stocks reportedly included 20 companies, which are expected to profit from blockchain and distributed ledger technology adoption.

As reported today, head of digital market assets at Credit Suisse, Emmanuel Aidoo, said that the desire among financiers to maintain the status quo is holding back the adoption of blockchain technology. Aidoo argued that banks’ unwillingness to adopt blockchain lies in the culture within banks, and has nothing to do with the technology’s immaturity or a lack of potential use cases within financial organizations.

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Local Media: Afghanistani, Tunisian Central Banks Consider Issuing Bitcoin Bonds

Afghanistan and Tunisia’s central banks are reportedly looking to issue a bitcoin bond.

Afghanistan and Tunisia’s central banks are looking to issue a bitcoin (BTC) bond, Hong Kong-based news outlet Asia Times reports on April 17.

Per the report, the governors of the two country’s central banks spoke at the annual Spring Meetings of the Boards of Governors of the World Bank Group and the International Monetary Fund in Washington between April 8 and 14. Afghanistan’s central bank governor Khalil Sediq allegedly told Asia Times that the institution is considering issuing a sovereign crypto bond to raise $5.8 billion.

The funds would be used for private-sector investment in mining, energy and agriculture. Alongside bitcoin, Sediq reportedly mentioned metal futures (for instance lithium) and pointed out that the country’s mineral reserves are estimated to be worth over $3 trillion.

On the other hand, Marouane El Abassi, governor of Tunisia’s central bank and former World Bank official, purportedly declared that the institution is looking into the issuance of a bitcoin bond. According to the report, Abassi also claimed that the country was one of the first to issue a digital currency and already implemented payments through a digital system.

Furthermore, Abassi also reportedly lauded bitcoin, blockchain and Hyperledger as a tool for central banks to combat money laundering, manage remittances fight terrorism and limit grey economies. Lastly, the article also notes that Uzbek ambassador Javlon Vakhabov mentioned that Uzbekistan does not rule out the development of a bitcoin bond either.

As Cointelegraph reported in September last year, Austria’s government also launched €1.15 billion ($1.35 billion) of government bonds on the Ethereum (ETH) public blockchain.

More recently, in March, Germany’s justice and finance ministries have proposed to launch a state-run register to boost the use of blockchain for electronic bonds.

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Germany Proposes Launching State-Run Electronic Register for Blockchain Sector

The German justice and finance ministries propose to launch a state-run registry to develop the blockchain sector and protect investors.

Germany’s justice and finance ministries have proposed to launch a state-run register to boost the use of blockchain, Reuters reports on Friday, March 8.

According to the Reuters, the seven-page initial guidelines offer to create a register to regulate the sector and protect investors from possible abuses. The document reportedly states that regulation in the sphere could contribute to the development of the technology behind cryptocurrencies, along with enhancing Germany’s position in financial markets.

The guidelines also propose easing existing requirements, which assume that financial instruments must have tangible counterparts that can be purchased by investors.

Reuters claims that current proposals are only related to electronic bonds, while digital stocks might be added later.

The chief executive body of the German government, the Cabinet of Germany, has recently announced that the country will introduce its blockchain strategy by mid-2019. The Ministry of Finance and the Ministry for Economic Affairs and Energy were cited as responsible for preparing the guidelines, with the expectation that other relevant ministries will contribute at a later time.

As Cointelegraph previously reported, the two ministries started discussing the proposals with industry members in mid-February. One of the key questions to be solved relates to the legal protection of those who purchase blockchain-based digital bonds. One of the possible ways to tackle the problem is to allow their purchase to institutional investors only, the ministries stated.

Earlier this year, Germany’s second largest stock exchange, Boerse Stuttgart Group, officially launched its crypto-trading app Bison, which enables free-of-charge trading in Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Ripple (XRP). Currently the app is only available for German users. However, by late 2019 the exchange plans to extend its services to all EU countries.