China Construction Bank to Sell $3 Billion Debt Bond on BlockchainNovember 12, 2020
Blockchain technology has given companies the opportunity to move from traditional operating methods to simpler methods. The latest developments in China confirm this point.
$3 Billion Bond Set for Sale via Bitcoin
China Construction Bank, the world’s second-largest bank, announced plans to sell $3 billion in debt to the public through Bitcoin. This is accomplished in partnership with Fusang Exchange, a Hong Kong financial technology company, as a broker.
$3 billion worth of digital certificates of deposit is traded on digital exchanges in Malaysia, according to an official news media report. The debts are sold through bonds that are issued in the form of certificates of deposit. In addition, these bonds are broken up into units and sold for thousands of dollars to attract investors.
By tokenizing certificates of deposit on the blockchain, private investors can now purchase digital certificates in small quantities. China Construction Bank’s certificate of deposit will be issued through its Labuan office within three months.
They have a minimum issue price of $100 each and a yield of approximately 0.75% on maturity. This is slightly higher than the local bank’s annual rate of around 0.23%.
The funds obtained from the sale of bonds are expected to be used to finance small and medium-sized banks in China.
Trading Opens the Door to More Investors
The transaction will also allow more investors to trade the bank’s digital certificates with Bitcoin on the Fusang Exchange. Fusang Exchange is a cryptocurrency exchange licensed by Labuan’s Malaysian Financial Commissioner.
Henry Chong, chief executive of Fusang, added that the transaction will begin this Friday. If the deal is successful, the exchange hopes to work with state banks to issue other currencies, including Yuan.
As the first part of the $3 billion plan, the Chinese bank will provide a digital certificate worth $58 million for public subscriptions.
Bonds are negotiable debt securities issued by governments or corporations to support spending commitments.
The transaction price for Chinese bonds is typically tens of thousands of yuan (over $4,000), which means that they are primarily intended for institutional and professional investors.
In related news, earlier this year, BTCManager reported the Bank of Korea was developing a blockchain-based bond issuance system.
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