By Tom Blitzer
Key Insights:
- ABN Amro collaborates with Tokeny, leveraging Polygon’s layer 2 Ethereum protocol for digital bond issuance.
- Vesteda, a real estate entity, aims to refinance green assets with the funds raised through the bond.
- Beyond ABN Amro, major players like Siemens are adopting blockchain technology for digital bond issuances.
ABN Amro, a Dutch banking entity, has partnered with Tokeny. Together, they have leveraged Polygon’s layer 2 Ethereum protocol, resulting in a €5 million digital green bond issuance.
Digital Finance Meets Sustainability
Green bonds, gaining traction, allow institutions to direct funds towards environmentally-conscious projects. Vesteda, a real estate investor, is set to benefit from the funds raised by ABN Amro’s digital bond. The investment is intended to help Vesteda refinance existing green assets within its financial framework.
The bond, represented as an ERC3643 token, is a product of Tokeny’s infrastructure. Due to its interoperability, Martijn Siebrand, ABN Amro’s digital asset lead, discussed the bond’s capacity for interaction with other public network applications.
Using the ERC3643 standard was a decision to embed necessary compliance rules directly into the bond. After the payment process, DekaBank received tokens corresponding to its €5 million investment. To handle the private keys of these digital assets, ABN Amro has designated Fireblocks.
A Look at the Digital Bond Ecosystem
ABN Amro’s involvement with digital bonds has been around for a while. The bank has previously engaged with the European Investment Bank (EIB) to purchase and resell a digital bond. Olivier Aartsen, who oversees ABN Amro’s debt capital markets, mentioned the bank’s interest in continuing digital bond offerings in the future.
Utilizing blockchain technology for bond issuance extends beyond just ABN Amro. In February 2023, Siemens issued a $64 million digital bond, securing investments from DekaBank, DZ Bank, and Union Investment.
The European Investment Bank also launched a digital bond in June 2023, which operates on a blockchain. This bond, valued at 1 billion Swedish krona and supported by an environmentally incentivized node infrastructure, aims to offer its institutional investors a 3.638% return over two years.
The intersection of finance and technology is evident as institutions explore bonds in the digital space. With initiatives like those from ABN Amro and Siemens, the financial sector is witnessing an evolution where digital solutions and environmental considerations combine.