China Construction Bank To Issue $3 Billion In Bonds On Blockchain
- Blockchain will make stocks and bonds more accessible to retail investors by lowering costs associated with this type of investment.
- Certificates will yield around 0.75% at maturity, which is much higher than the average 0.25% interest rate.
China Construction Bank sign in Beijing, China on January 22, 2017. Shutterstock
The second largest bank in the world, China Construction Bank (CCB), will issue $3 billion in bonds on blockchain in partnership with the Hong Kong-based digital asset exchange Fusang. As covered by the South China Morning Post, the certificates of deposit will be issued via CCB’s Labuan branch in Malaysia in a period of three months.
This will be the first digital security issued by a Chinese bank using blockchain technology. Issuing standard financial instruments on blockchain brings valuable benefits – it costs less and involves fewer financial mediators. That way CCB will be able to offer more cost-effective debt instruments, making them accessible to retail investors.
Felix Feng Qi, principal officer at CCB Labuan, commented on the endeavor:
“CCB Labuan is happy to play its role as lead arranger for the first publicly listed debt security on a blockchain. The issuance serves to narrow the divide between fintech and the wider financial markets.”
Until now, Chinese bonds were accessible primarily to institutions and big investors, as they would usually cost more than $4,000, an investment retail investors found hard to cope with. CCB plans to reach a minimum price of $100 for certificates, setting the bar substantially lower.
Advertised as Asia’s first fully-licensed Stock Exchange focused solely on digital assets, Fusang will record ownership using a technology from Securitize. Everybody interested in buying digital tokens will be able to do so using Bitcoin or US dollars. Trading will start this Friday, November 13, with a minimum investment of $100.
Upon success, Fusang plans to continue to work with the state-owned bank and issue certificates in more currencies – the Chinese yuan for example. Henry Chong, Fusang’s CEO, noted:
“We think this is the perfect showcase for how digital securities can power financial inclusion, by combining the exciting advancements in blockchain technology with the tokenisation of traditional securities. We believe that this will be the start of Crypto 2.0. – the true institutionalisation of digital asset products.”
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Office building of the People’s Bank of China. Flickr
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