Forget about the Security and Exchange Commission’s shaky decision-making in terms of Bitcoin ETFs, and take cues from the World Bank. They are now planning to launch the first blockchain bond in the world and have mandated the Commonwealth Bank of Australia (CBA) to arrange the blockchain-based financial instrument. The instrument named bond-i (Blockchain Offered New Debt Instrument) will be launched and managed exclusively on the distributed ledger technology.
Taking a Unique Path to Capitalize on Tech
Bond-i is a form of Kangaroo bond, i.e., a foreign bond instrument issued in Australia in the local currency — Australian dollars. The World Bank suggests that it will be the first instrument of its kind that will be created, allocated, managed and transferred using distributed ledger technology.
Both the World Bank and the Commonwealth Bank of Australia offered a joint press release on the matter, in which they said:
“Blockchain has the potential to streamline processes among numerous debt capital market intermediaries and agents. This can help simplify raising capital and trading securities; improve operational efficiencies; and enhance regulatory oversight.”
How Will Bond-i Operate?
Bond-i will work on a privately operated blockchain, managed by both the CBA and World Bank. This Ethereum-based blockchain will continue to be in use for the project until the two operating entities decide otherwise with the CBA clarifying that it is open to other options in the future. The World Bank remains confident that the investor interest in the bond has been very strong. However, it suggests that it would launch the transaction after consultation with more investors.
Some blockchain advocates believe that this step by the institutions will help in making processes faster and more secure. Skeptics, on the other hand, suggest that blockchain is still in its infancy, and there is a lot of hype around the potential of such a young technology.
The Ethereum blockchain that the World Bank and CBA will use is also the host of Ethereum (ETH) currency — currently the second largest in the world with a market capitalization of over $36 billion.