Following the confirmation of new digital asset rules in Italy, two state-owned banks have performed the first digital bond using the Ethereum-backed Polygon.
The €25m digital Polygon bond was performed by Cassa Depositi e Prestiti SpA (CDP) and Intesa Sanpaolo last Thursday (18 July), issued by CDP and Intesa Sanpaolo being the sole investor and underwriter.
The digital bond was settled in euros the same day via T+0 settlement services using the Bank of Italy’s TIPS Hash Link which enables interoperability between traditional and blockchain payment rails.
The transaction falls in line with the European Central Bank’s efforts to trial these types of settlements using fiat settlements on various blockchains to uncover new use cases.
The CDP and Intesa Sanpaolo digital transaction became the first of its kind under new Italian financial laws. The country introduced the ‘Fintech Decree-Law’ which aims to preside over all transactions of digital versions of particular financial instruments, stablecoins for example.
Commenting on the digital bond via a LinkedIn post, Head of Digital Assets Trading & Investments at Intesa Sanpaolo, Niccolò Bardoscia, said: “This transaction demonstrates how public blockchains are a powerful technology for financial institutions, making transactions faster and safer.
“Tokenisation is establishing a new standard for efficiency and automation in financial markets, and I believe this technological change will impact not only bonds but every asset class over the coming years.”
Tokenisation is rapidly becoming one of the most prevalent technologies within the financial field over the last several years, with tokenised assets projected to reach $10trn by 2030.
Real-world assets have also been the subject of tokenisation, such as house and car bills, etc., as the process enables a secure digitised form of security whilst also accelerating the speed of transaction.
