Today the Israeli Ministry of Finance and the Tel Aviv Stock Exchange (TASE) announced plans for a proof of concept to issue government bonds using blockchain. Protocol developer VMWare and custody provider Fireblocks will be part of this Project Eden.
The project’s goal is to speed up and reduce the cost of issuance and clearing government bonds, with the added benefits of greater transparency and a reduction in risks.
The blockchain system will be developed by TASE and involve live tests with local and international banks, with settlement using digital currency in an Israeli state e-wallet.
“I believe that blockchain-based technologies are here to stay, and over time will permeate the core of the financial markets, thoroughly and deeply altering them. It is our duty to constantly examine new technologies and methodologies,” said Accountant General Yali Rothenberg.
This system will integrate Fireblocks and VMware Blockchain for Ethereum together for institutional grade digital asset issuance, transfer, and custody.
VMware has previously been involved in Bank of Israel CBDC technical trials with a novel privacy solution. The company has an enterprise blockchain offering VMware Blockchain, which is also the ledger behind Australia’s ASX clearing and settlement system CHESS as well as ASX Synfini, Blockchain as a service. VMware Blockchain also powers the Broadridge DLR repo platform which is transacting more then $35 billion a day in repurchase agreements with UBS, SocGen and other large institutions.
The Tel Aviv Stock Exchange has considerable experience with blockchain, having launched a blockchain-based securities lending platform in 2020.
Several other governments around the world are exploring blockchain-based bonds. The British government recently announced plans to explore the topic. The Philippines and Thailand have both issued retail government bonds using distributed ledger technology (DLT). Poland has used blockchain for government bond reporting, with Korea announcing plans for a trial in 2020.
While it’s not a government bond, the European Investment Bank issued a €100 million bond on the Ethereum blockchain last year.