State-Owned Italian Bank Completes Digital Bond Issuance Using Polygon Blockchain

Italy's state-owned bank, Cassa Depositi e Prestiti SpA, has successfully issued a $27.2 million digital bond. The 25 million-euro bond will mature in four months on November 18, 2024.

The financial institution used the Ethereum layer-2 network Polygon, collaborating with the top investment bank Intesa Sanpaolo.

Italian Blockchain Bond Trial

The newly issued bond offers a fixed annual coupon rate of 3.63%. Intesa Sanpaolo was the exclusive institutional investor in this pilot project.

A vital aspect of this transaction was utilizing the Bank of Italy's TIPS Hash Link" tool. This tool allowed Cassa Depositi e Prestiti SpA to enable same-day cash flow settlement by bridging blockchain technology with traditional payment systems.

This feat demonstrates the potential for blockchain to enhance the efficiency and security of financial transactions.

Notably, this groundbreaking transactionwas announced as part of an initiative led by the European Central Bank (ECB). The initiativemainly explores new blockchain-based solutions for settling central bank money in wholesale transactions.

The issuance marks a significant milestone as it is the first of its kind since Italy's FinTech decree law became effective. This law primarily regulates the circulation and issuance of digital financial instruments.

Niccolo Bardoscia, who heads digital assets trading and investments at Intesa Sanpaolo, highlighted the significance of this transaction on LinkedIn. He emphasized how public blockchains can transform financial operations by making them faster and more secure.

Larry Fink, CEO of BlackRock, is a strong proponent of this trend, envisioning a future where every stock and bond is tokenized. However, not all experts share this optimistic view.

#Bitcoin is an International Asset. - Larry Fink, BlackRock CEO pic.twitter.com/WIVKITXYPj

- Michael Saylor (@saylor) July 5, 2023

Hilary Allen, a financial law professor, recently voiced concerns to the U.S. Congress, citing the fragility of public blockchains, particularly as a means of financial transactions. Moreover, they are also inefficient to handle the tokenization of trillions of dollars worth of assets.

The Tokenization Factor

Despite various challenges, experts predict that the market for tokenized assets will grow substantially in the coming years.

Boston Consulting Group projects that this market could reach $16 trillion by 2030. Meanwhile, McKinsey offers a more conservative estimate of $2 trillion within the same period.

Data from 21Shares on Dune Analytics indicates that over $89 billion in assets are already tokenized on blockchain networks. Meanwhile, Polygon ranks fourth in tokenized value, with $40.3 million, trailing only behind Ethereum, Mantle, and Stellar.

Notably, tokenizing assets, which involve converting real-world assets into digital tokens on a blockchain, is gaining significant traction in the financial sector.

This is because the token economy significantly eases the process of creating, buying, and selling securities for digital token issuers.

It enables trading traditionally illiquid assets such as fine art, providing much-needed liquidity to sellers and investors. A significant advantage of this system is that ownership details and rights are embedded directly into the digital tokens.

This feature allows easy access to information about the original owner and current dealers, ensuring transaction transparency and security.

The post State-Owned Italian Bank Completes Digital Bond Issuance Using Polygon Blockchain appeared first on The Tech Report.