Siemens is claiming ‘pioneer’ status with the issuance of the ‘first digital bond on blockchain’. The €60 million bond with a maturity of one year is ‘sold directly to investors’ and is said to have been issued ‘in accordance with Germany’s Electronic Securities Act*. Coindesk reported that the bond was issued on the Polygon blockchain, a Cayman Islands-registered provider of Ethereum-based blockchain solutions.
Siemens stated that blockchain brings ‘a number of benefits’ compared to conventional issuance. Paper-based certificates and central clearing are no longer necessary and the bond ‘can be sold directly to investors without needing a bank to function as an intermediary’.
Siemens has used the new possibilities of the Electronic Securities Act and sold the securities directly to investors ‘without engaging established central securities depositories’. Payments were made using classic methods ‘as the digital euro was not yet available at the time of the transaction’.
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’.
* a.k.a. the Gesetz über elektronische Wertpapiere (eWpG).
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Oil IT Journal was curious to know more
about the mechanics behind the novel form of financing. We emailed
Siemens with the following query:
‘Regarding your release on “Siemens issues first digital bond on blockchain”, You state that the bond is issued direct to individual investors. Does this apply worldwide? How is the identity of a purchaser verified? Is the transaction reported to the authorities (in DE or to the country of residence of the purchaser)? Are subsequent transactions between the purchaser and other third parties executed on the blockchain?’
Siemens responded with the following:
‘Many thanks for your message. Please understand, that it is a private placement and details of the transaction are confidential.’
We did not feel that this response was adequate and followed up with another request, pointing out that ‘these are extremely important issues in the light of money laundering and tax avoidance’. Despite several reminders Siemens has not seen fit to respond to our questions.
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