Yesterday JPX, the parent of the Tokyo Stock Exchange, published a report following feedback from more than 50 companies on the blockchain-based green bond issuance it made last year. There were several positive takeaways, but the challenges are what one would expect for a migration to a new type of system. These include the current lack of on-chain settlement, the need to expand the number of participating securities firms and investors, and a lack of a secondary market.
Stepping back, JPX partnered with Nomura and Hitachi last year to issue a blockchain-based green bond using the BOOSTRY ‘ibet for fin’ blockchain network. The proceeds raised were used for biomass and solar power generation.
Hitachi’s role was to track data regarding C02 emissions reduction in real-time. In contrast, most green bonds only have annual reports, which doesn’t match the investor requirements, who often need to report quarterly at a minimum. By automating the data collection, the reporting is also far easier to publish. And data is added to the security token itself. Hence one of the panel findings was that this methodology could be used beyond green bonds for sustainability-linked bonds and other instruments.
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