Spanish banking giants Santander claims that it is the first institution to use a public blockchain to manage all aspects of a bond issue.

Moreover, on Thursday the company <a href="https://www.fxstreet.com/cryptocurrencies/news/bank-santander-real-money-pilot-digitizes-a-20-million-bond-trade-on-ethereum-201909120801">revealed</a> that it not only used a token on Ethereum; to represent a $20 million debt issuance; but also settled it with another set of ERC-20 tokens representing cash held in custody account.

To illustrate that, imagine asking somebody a quiz on telegram or WhatsApp and waiting for them to mail a letter with the answer. That’s how it is like to issue securities on a blockchain while settling the cash side of the trade through the analog legacy system. However, Santander conducted both parts of the conversation digitally.

In addition, the World Bank issued a similar bond but it utilized a private version of Ethereum. French lender Societe Generale issued a bond this year on public Ethereum network but commented nothing about cash on-ledger.

In regards to this, Santander claims the bragging rights since every part of the whole process is digitized, automated and on chain. In addition, the bank has Santander Security Services custody the cryptographic keys for the tokenized security and tokenized cash.

Importantly, Santander issued the blockchain bond to itself. This means no outside investors were involved.

“It’s an evolutionary step. There are no secondary markets yet, but we are on that path,” John Whelan, head of digital investment banking at Santander’s corporate and investment bank, said.
<h2>Nivaura plus Santander</h2>
More importantly, Santander used London-based technology provider Nivaura to assist with the digitization of the issuance.

In light to this, Nivaura’s CEO Avtar Sehra pointed out that creating a<a href="https://www.cryptoknowmics.com/crypto/thai-oil-creates-blockchain-based-renewable-energy-marketplace/"> blockchain</a> bond is not hard. Essentially, what you are doing is developing a notarized form of information using a smart contract.

<strong>“This is not really digitizing a bond. All you are really doing is digitizing the process for registration and settlement; and even for the settlement part you are only addressing half the problem because you haven’t got cash on the blockchain,”</strong> he said.

In conclusion, Nivaura allows documentation and negotiation surrounding the issuance; to be digitized in a way that data will be encrypted. This will allow both parties to see certain parts of the fields in the document disregarding emailing of PDFs around.

“That’s the key significance of what Santander is doing here,” said Sehra. “They are saying ‘let’s digitize the entire process’. We are not now doing the bond construction in the old fashioned way; inputting data manually in an insecure fashion into a blockchain to tokenize it and doing the same with cash. That’s absurd.”

Spanish Bank Santander Settles a $20 M Bond Trade on Ethereum

Spanish banking giants Santander claims that it is the first institution to use a public blockchain to manage all aspects of a bond....%

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Spanish Bank Santander Settles a $20 M Bond Trade on Ethereum

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