Bank of China Issues $2.8 Billion in Blockchain-Based Bonds for Small Businesses

Bank of China, one of the four primary commercial banks in China, has issued 20 billion yuan or around $2.8 billion in blockchain-based bonds for small businesses with their own blockchain platforms. 

The bank revealed on December 6 that it finished pricing and issuance of the bonds for the first period last week, and the two-year bond will go to the market with a 3.25% coupon rate, as indicated by an announcement. The bank intends to raise funds to help these organizations.

“We have used our own blockchain-based bond issuance system in the process,”  the bank stated in the announcement. “This is also the first bond issuance ledger system that is based on blockchain in the country.” 

The bank utilized its own blockchain framework to issue digital certificates that demonstrate ownership, form groups of underwriters, and record verification of exchanges.

The bond issuance is a part of the nation’s push to support business owners with more proficient access to capital. As of September, the bank has loaned 404 billion yuan or around $57.7 billion to over 410,000 small and micro-sized enterprises, the bank stated.

Financing for small and medium-sized enterprises or SMEs has been one of the significant blockchain use cases for banks and financial services organizations in China.

Industrial and Commerce Bank of China (ICBC), the biggest bank by assets worldwide, began to provide factoring administrations (exchanges where a business sells account receivables to a third party at a discount in exchange for fast cash payment) to SMEs on their blockchain platform in February last year.

Ant Financial, the fintech arm of tech tycoon Alibaba, declared it would roll out its own blockchain platform to give SMEs more dependable financial services in three months.

Beyond China, Spanish financial tycoon Santander has issued $20 million bonds which trade on ethereum in September in an attempt to quicken the bond issuance method.