We foresee adoption of
|Blockchain not Bitcoin
Digital Currencies not Cryptocurrencies
Stable Coins not CBDCs
|Blockchain not Bitcoin
LIBRA not Cryptocurrencies
CBDCs from China & the BRICs not the US
These are picks of business media talk from the past and the present. As Ajit Tripathi, said to me in a conversation last week, `2015 was all about Colored Coins, 2016-2017 was ICOs, and 2019 has been DeFi`. His market pulse was more from the (small on a relative scale) crowd involved in the space.
I`ll take the torch from Ajit today, and zoom in even closer to Blockchain, crypto (I am at loss honestly, at this point, as to which umbrella term to use) to highlight the pilots that are growing in the bond space. And boy, is that space a huge one.
I will touch on what the incumbents are doing.
Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019.
The World Bank has been courageous in issuing bonds on the blockchain. BBVA has issued a structured green bond and Santander and Société General have also stepped up with bonds too. With the exception of the World Bank, all the other bonds are first ones and or internal placements.
Now over to MAS Sandbox Express (not a drivethrough) that just gave permission to BondEvalue to launch a Blockchain-based Bond exchange in Singapore. BondEvalue would deploy a permissioned blockchain infrastructure to enable electronic trading of bonds in $1,000 denominations with instant settlement (clearing obviously too) and greater price transparency. The focus will be on large high-grade bonds that through tokenization can be fractionalized.
The bond market remains a market with high bid ask spreads and problematic liquidity for small lots (in the 10s thousands) even for large, high-grade bond issues.
A blockchain-based exchange for high-grade Bonds Not another Exchange for Cryptocurrencies
I do like
The incumbent that will custody the tokenized bonds is Northern Trust. The US bank that ranks 24th in the US (by assets) and globally 10th as a custodian bank (by assets under custody).
Northern Trust is not an amateur with regards to blockchain. Their innovation and research center built and sold a blockchain platform for private equities. Broadridge Financial bought the platform from Northern Trust this past summer. They are developing it further by integrating their own blockchain patent for proxy voting at annual shareholder`s meetings.
2020 will see more DLT implementations in financial services to upgrade archaic business processes in the post-trade lifecycle of various financial instruments. While these steps forward can reduce overall costs, counterparty risks, can improve transparency, and liquidity; I have to call them out as mere tech upgrades.
D for Digital not for Distributed