Siemens is the latest corporate to venture into digital securities, issuing a €60 million ($65m) one year bond on the Polygon public blockchain. The issuance was organized by Hauck Aufhäuser Lampe Privatbank, which acted as bond registrar and provided the digital asset custody solution for the keys. DekaBank, DZ Bank, and Union Investment bought in the bond.
The tokenized bond was issued under Germany’s eWpG legislation for digitally native electronic securities that was passed in mid-2021. The legislation supports both centralized ledgers and distributed blockchains. The Deutsche Börse has used its D7 platform for several issuances, but so far, they have been on a centralized ledger.
In addition to providing a shared ledger which reduces the need for reconciliations, the blockchain securities are issued directly to investors sidestepping the cost and need for intermediaries.
Siemens is one of the first large corporates to issue digitally native bonds on a public blockchain, although there have been many more on private blockchains. To date, the main public blockchain issuances have been by banks such as Societe Generale, Santander, as well as the European Investment Bank. ABN Amro also conducted some small issuances for corporate clients.
While Hauck Aufhäuser Lampe Privatbank might not be the first bank you’d consider for tokenized securities, its digital assets unit is headed by Simon Seiter, who led Deutsche Börse’s Digital Assets unit for two years until September 2021.
Innovation is part of Siemens’ DNA and it has been participating in blockchain initiatives for years. It used blockchain for bank guarantees back in 2018 and more recently partnered with JP Morgan’s Onyx unit for blockchain-based payments.
“We are proud to be one of the first German companies to have successfully issued a blockchain-based bond,” said Ralf P. Thomas, CFO of Siemens AG. “This makes Siemens a pioneer in the ongoing development of digital solutions for the capital and securities markets.”