Capital markets News

Goldman, JP Morgan, Deutsche in Tel Aviv blockchain government bond trial

tel aviv stock exchange

Today the Tel Aviv Stock Exchange (TASE) and the Israeli Ministry of Finance announced that their proof of concept Project Eden for issuing a blockchain government bond was successfully executed on May 31. 

It included five Israeli banks – Bank Discount, Bank HaPoalim, Bank Leumi, Bank Mizrahi and First International Bank – as well as five globally systemically important banks – Barclays, BNP Paribas, Deutsche Bank, Goldman Sachs and JP Morgan – and Merrill Lynch.

The stock exchange said the trial showcased the risk reduction, efficiencies and transparency enabled by the combination of DLT, smart contracts and tokenization.

The dummy government bond was issued as a security token on a private blockchain, and a shekel payment token was used for settlement. The banks were involved as primary dealers and transferred the funds to settle the transactions atomically. The solution supports a variety of digital currencies, including CBDCs.

A dedicated TASE Bond Management smart contract acted as the intermediary between the government issuer and the investors, ensuring the validity of the tokens transferred.

“While everyday use of this technology to finance government debt is still in the future, we believe that this demonstration promotes the technological and regulatory discourse by all relevant parties to continue progressing towards a shared goal of improving the accessibility of financial markets for all,” said Ittai Ben Zeev, TASE CEO.

The project used VMWare Blockchain for Ethereum and partnered with Fireblocks and Ausralia’s Blockfold, a smart contract developer and auditor.

Meanwhile, in February, TASE unveiled a consultation around allowing non bank members, such as brokers, to provide cryptocurrency services to clients.