Siemens Successfully Issues First Blockchain-Based Bond

Siemens is the largest industrial manufacturing company and a multinational conglomerate based in Germany.

A blockchain is a distributed ledger made up of ever-expanding lists of records (blocks) that are cryptographically hashed to stay securely linked together. A blockchain is essentially a distributed digital ledger of transactions that is replicated across the entire network of computer systems that make up the blockchain.

Blockchain-based Bond is a particular kind of automated bond contract that makes use of the capabilities of blockchain databases, which can function as open, transparent, and cryptographically secure general ledgers.

Following Germany's Electronic Securities Act (Gesetz über elektronische Wertpapiere, eWpG), Siemens is one of the first companies in Germany to issue a digital bond i.e., the first blockchain bond. It has a one-year maturity, is worth 60 million dollars, and is supported by a public blockchain. There are several advantages to issuing the bond on a blockchain when compared to previous methods. For instance, siemens' first digital bond eliminates the need for central clearing and global certificates based on paper. Additionally, there is no need for a bank to act as an intermediary because the bond can be sold directly to investors.

Since the Electronic Securities Act went into effect in June 2021, digital bonds based on the blockchain can now be issued in Germany. Siemens has sold the securities to investors directly using the new options provided by the Electronic Securities Act without involving established central securities depositories.

Because the digital euro was not yet available at the time of the transaction, traditional payment methods were used. Within two days, the transaction was finished. With great success, Siemens supports its customers' digital transformation. Therefore, it only makes sense that we test and make use of the most recent digital finance solutions as well.

Siemens can complete transactions significantly faster and more effectively than when issuing bonds in the past by moving away from paper and toward public blockchains for issuing securities.