Digital bonds issued on Distributed Ledger Technology (DLT) increased 260% in 2024 to suffer from EUR 3 billion ($ 3.14 billion), a new report has revealed.
Distributed Ledger Technology (DLT) Capital Market Report Funs that the highest growth was in Europe and Asia, which has dominated the market for digital bonds in recent years. European units were the global leaders who issued EUR 1.7 billion ($ 1.77 billion) bonds at DLT, where Asia contributed EUR 1.1 billion ($ 1.15 billion).
The report, published by Association for the Financial Markets in Europe (AFME), quoted the European Central Bank (ECB) and Swiss National Bank (SNB) as two of the most important players. The two were involved in DLT attempts that issued EUR 1.8 billion ($ 1.88 billion) worth digital bonds, although some of the attempts that the ECB participated in involved US units.
Among the remarkable emissions in Europe was one 105 million euros ($ 109 million) digital bonds by the European Investment Bank and a issuance of EUR 100 million by France’s state lenders Caisse des Dépôts, who both debuted in November. Both used a wholesaler Central Bank digital currency (WCBDC) and was issued by the French Central Bank through its D3LS platform, with which it integrates WCBDC with existing payment rails.
Germany’s development bank Kfw and colleague German lenders Anger Also had remarkable emissions. Even governments also jumped in, with Slovenia Issue Its first digital bond in August while the Swiss city of Lugano fixed A CBDC-linked bond of $ 114 million earlier in the year.
“Although the adoption of DLT in capital markets is currently limited in relation to the size of the global market, its latest rapid growth and the emergence of new market players and product offerings present significant opportunities for future expansion,” commented Julio Suarez, the head of research at AFME.
Asia has also been increasingly active in the market for digital bonds, where Hong Kong has a leading management over other jurisdictions. In particular HSBC (Nasdaq: HSBC) have dominated The Asian market, with its Orion Blockchain platform that anchors dozens of emissions from some remarkable players in and outside Hong Kong.
The latest Asian giant exploring a digital binding is Toyota (Nasdaq: tm).
Toyota is aimed at customer engagement with March Digital Bond
Toyota Financial Services, the economic arm of the Japanese vehicle giant, will issue a digital bond in March. The bond is the company’s second; The first was by Toyota Leasing in Thailand 2020, worth $ 16.4 million But exclusively focusing on accredited investors.
The upcoming digital bond will be available to professional and retail investors, reports Local outlet coinpost. It will be an uncertain security token binding worth a billion yen ($ 6.5 million) with a maturity of one year.
The car manufacturer will issue the bond on proged, a DLT platform founded by Japan’s largest bank, MUFG (Nasdaq: Mufg). Proggmat has become the country’s premiere tokenization Platform, with some of its members including Japan Exchange Group and the other two largest banks – Mizuho (Nasdaq: MFG) and Sumitomo Mitsui (Nasdaq: SMFG).
MUFG will serve as a bond administrator, while Daiwa Securities (Nasdaq: DSECF) will be the only insurer.
Toyota has structured the bond to direct retail investors, and since it is a relatively less bond, it is conceivable more an attempt to engage the company’s customers than a collection drive. The company also promised bonuses to customers who buy the bonds with Toyota Wallet, a service that allows customers to make payments with their smartphones.
DLT Bond debate
The AFME report led to an ongoing debate on the range of DLT bonds. The association only considered bonds whose emissions did not involve a central securities storage (CSD) and ignored if DLT was used in other aspects.
For example, in June last year, Germany’s KFW bank Issued A digital bond of € 4 billion ($ 4.28 billion) on clearstream, a platform at the trade owned by Deutsche Borrse (Nasdaq: Dboef). The bond relied on a centralized book for the issuance, even if it dropped Dlt and smart contracts for aspects such as settlement. KFW followed this up with an additional $ 4.5 billion ($ 4.7 billion) digital bonds on clearstream. Last month, the bank issued EUR 9 billion (9. 4 billion) in digital bonds on the same platform.
Afme did not consider these bonds in their report when relied on a centralized book.
Still, AFME projects that the sector will grow steadily over the next few years.
“Undoubtedly, the DLT-based issue will continue to grow over time, and we are pleased to be the first association in Europe to regularly produce data on this growing asset class,” commented Suarez.
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