Italy’s First Digital Bond Issuance Under New FinTech Rules

Italy’s state-owned development bank, Cassa Depositi e Prestiti SpA (CDP), and Intesa Sanpaolo, the country’s largest lender, have successfully completed a pioneering digital bond issuance using blockchain technology. This marks the first transaction under Italy’s new digital asset regulations.

A Landmark Transaction

As reported by Krisztian Sandor from CoinDesk, the 25 million euro ($27.22 million) bond, with a four-month maturity, was issued by CDP on the Ethereum-based Polygon (MATIC) network. Intesa Sanpaolo acted as the underwriter and sole investor. The cash flow for this transaction was settled in euros on the same day (T+0) using the Bank of Italy’s “TIPS Hash Link” tool, which facilitates interoperability between blockchains and traditional payment systems.

Regulatory and Technological Milestone

This issuance is notable for being the first digital bond under Italy’s “FinTech” decree-law. This law governs the issuance and circulation of digital versions of specific financial instruments. According to the original report by Krisztian Sandor, the transaction aligns with the European Central Bank’s (ECB) initiative to explore methods for wholesale fiat money settlement on blockchains.

Global banks and asset managers are increasingly exploring the tokenization of traditional financial instruments, such as bonds, credit, and funds, to gain operational benefits. These benefits include faster and more transparent transaction settlements, reduced costs, and enhanced efficiency. As noted in the CoinDesk article, this transaction highlights the potential of public blockchains in transforming financial operations.

“This transaction demonstrates how public blockchains are a powerful technology for financial institutions, making transactions faster and safer,” said Niccolò Bardoscia, head of digital assets trading and investments at Intesa Sanpaolo, in a LinkedIn post. Bardoscia added, “Tokenization is establishing a new standard for efficiency and automation in financial markets, and I believe this technological change will impact not only bonds but every asset class over the coming years.”

As reported by CoinDesk, the successful issuance of this digital bond represents a significant step forward in the integration of blockchain technology within traditional financial systems. This transaction not only underscores the growing interest in digital assets but also sets a precedent for future financial innovations under Italy’s new FinTech regulations.

For more details, you can read the original article on CoinDesk.

Image by Anders Jildén from Unsplash

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