Siemens, the German engineering and technology giant, has become the first company to successfully issue bonds on a public blockchain under Germany's Electronic Securities Act 2021.
The offering raised €60 million on the Polygon blockchain. By using a public blockchain, Siemens was able to sell the bonds directly to investors without using a bank to function as an intermediary in issuing the bonds. The offering also makes paper-based global certificates and central clearing unnecessary. Investors in the bonds included ekaBank, DZ Bank, and Union Investment.
Peter Rathgeb, Corporate Treasurer at Siemens hailed the bond issuance as a huge success for the company and an important milestone in the development of digital securities in Germany:
"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."
According to Siemens, investors paid for the bonds using the traditional banking system as the digital euro is not yet available. The transaction was able to be completed within two days. Direct payment on chain using digital currency or CBDCs offers the promise of further efficiency in the future.
It has been possible to issue blockchain-based digital bonds in Germany since the Electronic Securities Act came into effect in June 2021. A number of German companies have taken up this opportunity, but Siemens is reportedly the first to do so using a public blockchain.
This is not Siemens' first foray into blockchain technology. The firm has reportedly experimented with blockchain technology for energy trading and car sharing.
Given the advantages of blockchain based offerings, Siemen's successful bond issuance is likely to pave the way for other companies to issue securities on public blockchains within existing regulatory frameworks.