$520B state-owned Italian bank tests digital bonds at Polygon
Italy's state-owned bank Casa Depositi e Prestiti SpA has completed a $27.2 million digital bond issuance with trillion-dollar investment bank Intesa Sanpaolo using Ethereum's Layer-2 Polygon.
Intesa Sanpalo said in a statement on July 18.
Italy has introduced the FinTech Act, the first transaction of its kind, which regulates the digital issuance and transfer of financial instruments.
The compensation deposit is a $27.2 million (€25 million) bond that matures in four months – 2018. It matures on November 18, 2024 – and offers a fixed coupon of 3.63%, compounded annually. Intesa Sanpalo was the only institutional investor in the trial.
The cash flow was settled on the day through the Bank of Italy's “TIPS Hash Link” tool, which allows interoperability between blockchain and traditional payment rails.
“This transaction shows how public blockchains are a powerful technology for financial institutions,” Niccolò Barduccia, head of digital assets trading and investments at Intesa Sanpaolo, explained in a LinkedIn post on July 18.
“This technological change will affect every asset class in the coming years, not just bonds.”
Tokenization has also been championed by BlackRock CEO Larry Fink, who believes that every stock and bond will move on blockchain rails in the future.
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Not everyone shares Fink's view, however.
Last month, financial law professor Hilary Allen told the US Congress that public blockchains are too “weak” to simulate trillions of dollars in real-world assets because they are too inefficient and cannot handle large transaction volumes.
Meanwhile, Boston Consulting Group predicts that the token market could reach $16 trillion by 2030, while another consulting firm, McKinsey, predicted a more modest $2 trillion by the same time.
According to data compiled by 21Shares on Dune Analytics, there are more than $89 billion in tokenized assets on the blockchain.
Polygon ranks fourth in blockchain with $40.3 million – trailing only Ethereum, Stellar and Mantle.
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