Siemens Goes Digital For Million-Dollar Bond

The engineering company has issued a $64 million digital bond on a public blockchain, claiming that it is much faster than the traditional channels of issuing bonds.

$65M Digital Bonds

Siemens has become one of the first companies in Germany to issue a digital bond worth 60 million euros or $64 million. The bond will follow the country’s Electronic Securities Act and will mature in a year. The tech giant announced the news on February 14, claiming that the bond was sold directly to investors without the involvement of central clearing or paper-based global certificates on the public blockchain. Furthermore, the company also pointed out that the digitalization of bonds increased overall transaction speed and efficiency as opposed to the traditional bond-issuing methods. 

In the announcement, the company said, 

“Issuing the bond on a blockchain offers a number of benefits compared to previous processes. For instance, it makes paper-based global certificates and central clearing unnecessary. What’s more, the bond can be sold directly to investors without needing a bank to function as an intermediary.”

MATIC Jumps Up

The companies that invested in this digital bond include DekaBank, DZ Bank, and Union Investment. It is to be noted that the digital euro payment system was not available at the time of the transaction. Therefore the investment transactions were conducted using traditional payment methods. However, the entire process was accomplished in just two days on the Polygon blockchain. As a result, the shares of Polygon’s native crypto, MATIC, saw a 7.21% increase in value after the announcement of the digital bond on February 14. At the time of writing, the MATIC token was valued at $1.27. 

Siemens’s Blockchain Moves

The company has long since tried to establish itself as a pioneer in developing digital solutions for the capital and securities markets. 

Addressing its blockchain and crypto ambitions, Siemens AG Corporate Treasurer Peter Rathgeb said, 

“By moving away from paper and toward public blockchains for issuing securities, we can execute transactions significantly faster and more efficiently than when issuing bonds in the past. Thanks to our successful cooperation with our project partners, we have reached an important milestone in the development of digital securities in Germany.” 

Indeed, the company has been making rapid strides in the blockchain and crypto space. It first came into notice as a crypto backer when it extended its support to the blockchain-based energy trading platform Pebbles in 2020. The next year, the German tech giant partnered up with JPMorgan Chase to develop a blockchain-based payment system to simplify and streamline payments through automatic money transfers between its own accounts. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.