Santander Redeems $20M Bond Using Ethereum Blockchain

Spain’s multinational banking giant Banco Santander has just redeemed a $20 million bond using the Ethereum blockchain.

The firm has performed an early repayment of the blockchain-based bond that was issued on Sept.10, 2019, which purportedly shows that the public Ethereum blockchain can be applied to securities issuance across the full lifecycle of a security.

“Debt security can be managed through its full lifecycle on a blockchain”

John Whelan, head of Digital Investment Banking at Santander, tweeted on Dec. 10:

“We just performed an early redemption of our blockchain-based bond that we issued on September 10th, 2019. This unequivocally proves that a debt security can be managed through its full lifecycle on a blockchain (public in this case).”

Whelan, who also chairs the board at the Enterprise Ethereum Alliance, a major global blockchain consortium, provided public transactions on Ethereum block explorer Etherscan to prove the transaction. As Santander acted both as issuer and investor in the transaction, Whelan disclosed transactions on the issuer wallet and investor wallet.

Santander applies blockchain to speed up and improve bond issuance

The news comes after Santander issued its first end-to-end blockchain bond, as announced on Sept. 12. The company said that the move intends to make issuing bonds faster, more efficient and simpler. Santander also said that the bond will remain of the Ethereum blockchain until the end of its one-year maturity.

As blockchain technology continues to gain traction with a number of industries, Santander is evidently not the sole financial institution to experiment with the tech in securities issuance.

As reported in mid-November, global banking giant HSBC started exploring the use of blockchain for issuance of fixed income securities in partnership with Singapore Exchange and investment firm Temasek. Specifically, HSBC intends to bolster the bond issuance process and reduce associated costs by applying tokenized securities and smart contracts.

Earlier in October, the credit rating arm of financial services giant Morningstar revealed it was working on a blockchain platform for debt securities issued as tokens on a blockchain.