We Love Decentralization

How big banks promote blockchain tech with a new €100M digital bond issuance

Goldman Sachs recently launched its digital asset tokenization platform, GS DAP. The platform’s first transaction was the issuance of a €100m ($104m) digital bond for the EIB (European Investment Bank) on the private GS Blockchain. This is EIB’s second digital bond issuance, and like the previous one, it also involved Santander, Goldman Sachs, Société Générale, and the Banque de France.

In a delivery-versus-payment transaction, the 2-year syndicated bonds were settled instantaneously using experimental central bank digital currency tokens (CBDC) issued by Banque de France. Both the bond and CBDC tokens are stored on separate blockchains.

The bond was issued under Luxembourg law. Because of this, the Banque centrale du Luxembourg also assisted with bond settlement. Furthermore, the security is now listed on the Luxembourg Stock Exchange.

The upcoming EU DLT Pilot Regime will allow even more digital security testing throughout the European Union, starting next year. Ricardo Mourinho Felix, Vice President of EIB, said that blockchain will play an important role in Europe’s success with digital and green transitions and strengthens its technological sovereignty.

In this instance, the key benefits of blockchain are their ability to settle transaction quicker and a better operational efficiency. Tokenized securities offer new opportunities for business, in addition to efficiencies.

In this experiment, Société Générale Securities Services is the on-chain custodian, with the other banks involved as joint lead managers. Among the investors were also AXA IM and Union Investment, which had previously bought EIB’s first digital bond issued in April 2021 on the Ethereum blockchain.

Goldman Sachs DAP platform was created in collaboration with Digital Asset, using the DAML smart contracts language. The EIB also executed an interest rate swap using the GS DAP platform. This was done using the Common Domain Model – an ISDA standard for derivatives. The EIB’s Project Venus, will involve the issuing of a number of digital bonds, in addition to this one.

Goldman Sachs is also involved in several other projects including crypto derivatives.