Last week it was reported that China Construction Bank (CCB) was involved in a blockchain bond with Malaysia’s Fusang Exchange. While the Fusang announcement claimed it could be up to $3 billion, we reported that the initial issuance was far less, around $14 million.
The bond is to be backed by funds held on trust at the Labuan branch of CCB. Subsequently the bank was keen to downplay its involvement. And then on Friday, the issue was postponed.
As we reported, the bank is not responsible for the bond liabilities, which will be issued by a special purpose vehicle called LongBond. We noted that the bank “acts as lead arranger and listing sponsor but does not stand behind the prospectus.”
In response to media reports elsewhere, the bank issued a statement saying that:
- “the Branch is NOT the issuer of the Bond”
- “the role of the Branch is as the Lead Arranger, Listing Advisor of the Bond”
- “and the Facility Agent to facilitate clearing and settlement of the Bond in USDs. Rhe Branch does NOT accept cryptocurrencies including Bitcoin for settlement in any of its banking transactions”
However, Fusang is promoting the CCB’s involvement and its announcement states the cash that backs the bond is held on trust at the CCB. We previously noted that costs come out of the trust funds and there are no cost estimates.
While the issuer is LongBond, the contact details are at Baxian Trust (Labuan) Limited, part of Portcullis Group. The President of Portcullis, David Chong, is also the Chairman of the Fusang Exchange.