ABN Amro Partners with Fireblocks to Issue First Digital Bond

ABN Amro (EURONEXT:ABN), a Dutch financial services provider, has registered a digital bond on the public blockchain in collaboration with two crypto companies, Fireblocks and BitBond. Thus, ABN became the first institution in the Netherlands to list a debt certificate using distributed ledger technology.

ABN Amro and The First Blockchain Bond in the Netherlands

According to the press release from Thursday, the digital bond was issued in three steps. First, BitBond developed a smart contract on the Stellar blockchain. Next, ABN used the Fireblocks tokenization platform to mint and custody the new token. In the final step, bond ownership was recorded on the blockchain in the form of tokens that investors could purchase after paying for the bond itself.

ABN Amro issued the first digital bonds in the Netherlands on behalf of APOC Aviation, an aircraft company, which became ABN's commercial client for blockchain investments. The bond was issued to a select group of investors and raised EUR 450,000.

"This updated digital solution for providing our medium-sized and larger commercial clients with leveraged financing fills a gap between traditional bonds and crowdfunding. Thanks to the blockchain, it's highly efficient and very client-friendly," Edwin van Bommel, the Chief Strategy & Innovation Officer at ABN Amro, commented.

Previously, the financial services provider had gained experience in digital bonds by purchasing them from European Investment Bank for later resale. The knowledge gained in the process allowed the company to issue similar products independently.

According to Michael Shualov, the CEO and Co-Founder of Fireblocks, the distribution of the first digital bond in the Netherlands sets a new standard for traditional banks to serve commercial clients better. It brings more real use cases of distributed ledger technology to financial markets.

Israel Was First, ABN Amro Comes Second

Just a few months ago, the Israeli Ministry of Finance, in cooperation with the Tel Aviv Stock Exchange (TASE), launched the first digital government bond in partnership with Fireblocks and Vmware.

The project, called 'Eden', is conducted as a pilot and if the tests go smoothly, there is a chance it will be implemented on a broader scale. The current Proof of Concept includes digitizing and issuing new state bonds with the participation of local banks connected to a dedicated blockchain network developed by TASE.

"As a global technology leader, we hope to see Israel spearhead financial technology as well, being the first to implement cutting-edge technologies and upgrade the capital market, making it more accessible to the public," Ittai Ben-Zeev, the CEO of TASE, commented in October 2022.

Digital bond offerings are becoming increasingly popular in various places around the world. In November, UBS AG, a Swiss financial company headquartered in Zurich, priced the first-ever digital bond settled on both a traditional and a blockchain exchange. The product will be dual-listed at the SIX Swiss Exchange and SIX Digital Exchange.