DBS, Singapore’s largest bank, has become the first bank in Southeast Asia to issue a blockchain-based bond.
Traditional securities will be wrapped in a digital framework, which issuers hope will make them easier to trade. Fractionalization is also possible with this method; by chopping up bonds and turning them into fungible tokens, unmanageable investments can be made more manageable.
DBS has set a price of $11.3 million for the blockchain bonds that will underpin its future security token sale. STOs are a type of security token that sells cryptocurrencies that reflect off-chain securities (like stocks). They’re a means to raise money, similar to ICOs (initial coin offerings).
The bank’s digital bond, according to DBS’s head of capital markets, Eng-Kwok Seat Moey, is a gamble on blockchain’s widespread acceptance.
The bonds have a six-month maturity date and pay 0.60 percent annually. They are available in SGD 10,000 ($7,568) batches.
DBS’s cryptocurrency platform, the Digital Exchange (DDEx), founded late last year, is where the bonds are traded. The trade additionally gives trading among four fiat currencies (SGD, USD, HKD, and JPY) and four cryptocurrencies, in addition to the digital bond (Bitcoin, Ether, Bitcoin Cash, XRP).
The issuance was performed privately, and DBS was the lone bookrunner. DBS is allowing “institutional and accredited investors who are either members or applicable end clients of members of DDEx” to participate in secondary market transactions.
