In what is believed to be an industry first, Santander recently announced the completion of a $20 Million bond settlement.
This process, which took place on the public Ethereum blockchain, was unique, as the entirety of it was completed digitally – including, both, the issuance and settlement.
Santander completed this feat as a sort of pilot, proving the viability and efficiency of the process to, not only themselves, but outside parties. With this in mind, the issuance and settlement was completed without any secondary parties – meaning that Santander not only issued the tokenized securities to themselves, but handled the settlement in-house as well.
Santander was able to develop the means to complete this process through the help of Nivaura. With Santander being an investor in the tech provider, it should come as no surprise that they were chosen to assist.
- World Bank
Through use of a tailor built private blockchain – borrowing much of the Ethereum structuring – World Bank raised $33.3 million from investors. This was made possible by issuing tokenized bonds, known as Bond-i.
- Societe Generale
In April of 2019, this European banking giant, which was founded in 1864, tested the blockchain waters. This took form as a pilot, which saw the bank issue $100 million EUR worth of covered bonds to themselves. The process was completed through the use of security tokens, issued over the Ethereum network.
Upon announcing the successful issuance and settlement of the bond, representatives from each, Santander and Nivaura, took the time to comment.
José Garcia Cantera, CFO of Santander, stated,
“Santander is at the forefront of the profound digital transformation of the financial sector and this transaction is one example. We want to take advantage of any technology that can accelerate that process, so that our customers thrive and be faster and more efficient, and blockchain is one of those technologies.”
José María Linares, Global head of Santander Corporate & Investment Banking, stated,
“Our clients are increasingly demanding the best thinking and technology in how we serve them in their capital-raising efforts. This blockchain-issued bond puts Santander at the forefront of capital markets innovation and demonstrates to clients that we are the best partner to support them on their digital journey.”
Avtar Sehra, CEO of Nivaura, stated,
“That’s the key significance of what Santander is doing here…They are saying ‘let’s digitize the entire process’. We are not now doing the bond construction in the old fashioned way, inputting data manually in an insecure fashion into a blockchain to tokenize it and doing the same with cash. That’s absurd…The Santander execution is the first truly digital front to back execution process, which securely uses relevant data to tokenize both the assets and cash to enable on-chain settlement and coupon payments.”
Banco Santander is a leading Spanish bank that services over 140 million customers. Since a rebranding in 2018, the company has placed an increased focus on next-gen technologies, such as DLT and blockchain.
Operating out of London, England, this tech provider was founded in 2015. Above all, the team behind the project works to develop solutions which drive digital investment banking.
CEO, Avtar Sehra, currently oversees company operations.
Spencer Dinwiddie DREAM Shares launches January 13th
After a sizable delay and numerous run-ins with NBA executives, it now appears that Brooklyn Nets point guard Spencer Dinwiddie will get to bring his tokenization strategy to the market. Dinwiddie took serious heat from the league when he announced plans to tokenize a portion of his contract. Now, after almost three months of delays, Dinwiddie’s token-based investment tool prepares to enter the market.
DREAM Fan Shares
Dinwiddie wants to let his fans own a portion of his contract via the DREAM fan shares platform. This blockchain-based tokenization strategy would allow Dinwiddie to digitize a portion of his contract. These tokenized shares would then be made available to fans seeking to increase their stake in the athlete’s career.
According to Dinwiddie, DREAM shares are set for a January 13th launch date. The date will coincide with Dinwiddie’s first career All-Star Game. In this manner, Dinwiddie can couple the publicity to further promote his unique tokenization strategy.
As part of this strategy, Dinwiddie seeks to sell 90 SD8 coins. Each coin represents a tokenized share in his $34 million contract. If successful, Dinwiddie will be able to collect up to $13.5 million of his guaranteed three-year agreement without having to wait until the final years of the contract. In essence, the agreement provides him with a new age business loan.
NBA Officials not Pleased
For their part, the NBA has been unapathetic towards the young player’s decision to tokenize his contract. These disagreements with the NBA came to a head when the league threatened to terminate his contract and ban him from the league during negotiations. Luckily, Dinwiddie instituted some changes to his strategy which alleviated much of the league’s concerns.
One of the main problems the NBA had with Dinwiddie’s original strategy had to do with his final years. In the original agreement, Dinwiddie wanted to provide his investors with a chance to make larger dividends if he were to acquire a more lucrative contract with Brooklyn or another team. This section struck NBA officials as problematic with some calling it gambling. Officials were so concerned they threatened to terminate his contract if the clause wasn’t removed.
After four intense negotiations in person and three additional correspondences over the phone, Spencer Dinwiddie was able to secure league approval for his concept. Discussing the decision, he admitted that he never expected the league to support his idea fully. Luckily, he had some strong support for the plan from the Players Association. Also, he had a team of lawyers by his side to ensure that his rights were not violated.
Dinwiddie Just Changed the Game Forever
It’s not too often that a single player changes the game forever, but in this instance, Dinwiddie has utilized blockchain technology to provide more liquidity in the market. You can expect to see DREAM shares start to tokenize more athletes and entertainers’ contracts in the coming months. In this way, these individuals can cash out their multi-million dollar agreements without waiting years to do so.
Horizon Tech Stack Makes Piemonte Bond Issuance & Trading a Reality
It was recently announced that Piemonte Holding has not only completed their issuance of a $16.2 million Ethereum based bond, but that it is now live for trading through secondary markets amongst Piemonte clients.
This development was made possible through utilizing a tech-stack, made available by Horizon. The company indicates that some of the solutions afforded to Piemonte include the following:
- Compliance measures
- Trading solutions
Piemonte indicates that this announcement represents the fruition of multiple years’ worth of hard work. They state that in as early as 2017, they began to experiment with and incorporate blockchain and its various benefits within their own operations.
One of the #1 draws, and promises, surrounding digital securities is the potential liquidity they will afford investors in the future.
For this promise of liquidity to become a reality, there need to be secondary exchanges hosting these tokens, creating and providing a marketplace for them to be traded. Without this capability, a major part of the allure revolving around digital securities disappears.
Horizon is not the only company that has set out with the goal of establishing a respected secondary marketplace for digital securities. They do, however, remain one of the first to go live with their offering.
The following companies are just a few of those that are known to be developing similar solutions:
Upon announcing the developments discussed here today, representatives from each, Piemonte and Horizon, took the time to comment.
Alessandro Lombardi, CEO of Piemonte, states,
“In August we issued our tokenized Smart Bond and today we’re launching the first regulated bond-trading marketplace on a public blockchain…Although this Smart Bond’s issuance was limited to qualified private investors, the Smart Bond was fully subscribed with zero distribution efforts made by Piemonte. We can only imagine the distribution and liquidity potential of future blockchain bond offerings once these competitive bonds are open to the general public…We believe we are making a transformational and historical deal by streamlining our book-building, investor compliance, asset allocation and bond custody using Horizon’s technology…We share Horizon’s compliance values and believe that this integrated approach helps to provide a streamlined path to usher the bond market into the digital era. We believe that it’s no longer a matter of us asking IF blockchain will underpin major global securities platforms; after today, it’s only a matter of WHEN.”
Brian Collins, CEO of Horizon, states,
“The idea that blockchain could have the potential to open and bring liquidity to the bond market has been discussed, and trialed, at length. Today, we’re proud to work alongside Piemonte to bring their compliance-focused bond market concept to fruition and introduce liquidity potential to a historically illiquid market with our integrated issuance, KYC, AML, custody, and trading solutions.”
Founded in 2012, Piemonte Holding maintains operations in Rio de Janeiro, Brazil. The company specializes as an investment manager, by developing, and managing, custom financial products for its clientele.
CEO, Alessandro Lombardi, currently oversees company operations.
Operating out of Zug, Switzerland, Horizon is ‘Software-as-a-Solution (SaaS) company, which was founded in 2010.
CEO, Brian Collins, currently oversees company operations.
We recently took a deeper look at the company, and what it is they have to offer. If interested in learning more about Horizon, be sure to peruse the following article.
Speaking with Brian
Earlier this year, we had the pleasure of completing an exclusive interview with Horizon CEO, Brian Collins, accompanying our own look into the company. In the following interview we learn more about what the company has achieved so far, and where they plan to go in the future.
In Other News
Horizon has been on a tear lately, with a string of positive developments. One example of this is the successful completion of their Series A – validating belief, and interest, in the company and what they have to offer.
Santander Redeems Debt Security Early
This month, the international Spanish banking giant Santander concluded their testing of a blockchain-based securities strategy. The bank performed an early redemption of a $20 million bond the firm issued on the Ethereum blockchain back in September.
At the time of issuance, the $20 million tokenized bond was a pilot transaction. Developers needed to confirm that the technology would function as promised. Discussing the strategy, the head of Digital Investment Banking at Santander, John Whelan described the project as a success.
Whelan didn’t mince words as he discussed the progress to date. He exclaimed that the tests “unequivocally proves that a debt security can be managed through its full lifecycle on a blockchain.” He also spoke on the importance of this technology as a real-world solution for securities issuance. Notably, Whelan is also the chairman of the Enterprise Ethereum Alliance.
Santander – A Tokenized Bond Strategy
In this instance, Santander functioned as both the investor and the issuer. This strategy made testing easier to complete. To begin the process, a custom Ethereum token was made to represent the bond. Santander Security Services provided custody of the cryptographic keys as part of the concept.
Interestingly, when it was time to cash out, Santander settled it with another token that represents cash held in a custody account. In this manner, the bank streamlined the entire securities issuance and management process.
Whelan took to social media to praise his team’s efforts. In his posts, he provided the public blockchain transactions on Etherscan. Etherscan is a blockchain scanning tool that allows you to find proof of the transactions.
An Important Milestone
While Santander isn’t the first institution to issue a tokenized bond, it is the first major financial institution to use a public blockchain to manage all aspects of a bond’s issuance. To date, other major firms that have stepped into the tokenization sector such as World Bank and Societe Generale. Currently, both banks have tokenization programs in place.
A More Efficient Alternative
One of the key takeaways from the project is that the use of smart contracts removes the need for expensive third-parties. This strategy provides investors with a more secure alternative than the status quo. Smart contracts allow developers and issuers to preprogram the regulatory compliance mechanisms directly into the token. In this manner, the token remains compliant throughout its entire lifecycle, including secondary trading markets.
Santander began service in 1902. Formerly, Santander went by another name – Sovereign Bank. Today, the bank has offices around the globe with the main North American headquarters based in Boston. Respectfully, the bank has a yearly net income of around $1.042 billion USD.
Since its inception, Santander has seen great success. Today the bank has over 650 retail banking offices and over 2,000 ATMs internationally. Notably, the bank employs approximately 9,800 people.
Santander Joins the Tokenization Train
This latest news showcases how major financial institutions continue to seek out blockchain alternatives. Now that the testing phase of Santander’s blockchain strategy is complete, you can expect to see a variety of new financial products and tools become available in the coming weeks.