Siemens, one of the leading German engineering and technology companies, recently became one of the first German companies to issue a digital bond on a public blockchain.
The bond, worth 60 million euros ($64 million), has a maturity of one year, in compliance with Germany’s Electronic Securities Act. Siemens sold the bond directly to DekaBank, DZ Bank, and Union Investment, without the need for central clearing and paper-based global certificates.
According to Siemens, the use of blockchain technology has multiple benefits compared to traditional bond-issuing methods, such as making paper-based global certificates and central clearing unnecessary, which leads to faster and more efficient transaction execution. Additionally, the bond can be sold directly to investors without the need for a bank intermediary, which reduces costs and provides greater control over the process.
While the transaction was completed using traditional payment methods due to the digital euro's unavailability at the time of the transaction, it was still completed in only two days.
In a statement released on February 14th, Siemens AG corporate treasurer Peter Rathgeb said, “By moving away from paper and toward public blockchains for issuing securities, we can execute transactions significantly faster and more efficiently than when issuing bonds in the past. Thanks to our successful cooperation with our project partners, we have reached an important milestone in the development of digital securities in Germany.”
Siemens’ move toward blockchain technology is not a new development, as they have been experimenting with it for a few years now. In October 2020, Pebbles, a blockchain-based energy trading platform backed by Siemens, held a virtual demo of its marketplace for optimized electricity trading.
While that Pebbles platform was kind of like a blockchain Enron, this new blockchain-based bond mechanism could actually catch on in the future. And even if it comes to nothing, it's good to see major European multinationals like Siemens continuing to develop blockchain products–especially in the EU, where it seems like they're always trying to kill crypto.