Italy’s First Digital Bond Issuance Using Blockchain Technology

Italy’s Innovative Step in Digital Bond Issuance

In a groundbreaking move for the financial sector, Italy’s state-owned development bank, Cassa Depositi e Prestiti SpA (CDP), alongside Intesa Sanpaolo, the nation’s largest lender boasting assets exceeding $1 trillion, successfully completed a digital bond issuance utilizing blockchain technology on Thursday. This event marks the first transaction of its kind under Italy’s newly implemented digital asset regulations.

The bond, valued at €25 million with a maturity period of four months, was issued by CDP on the Ethereum-based Polygon (MATIC) network. Intesa Sanpaolo acted as the underwriter and sole investor in this innovative financial endeavor, as detailed in a recent press release. Notably, the cash flow was settled in euros on the same day (T+0), leveraging the Bank of Italy’s “TIPS Hash Link” tool, which facilitates interoperability between blockchain systems and traditional payment infrastructures.

This transaction is significant as it represents the inaugural issuance of a digital bond under the country’s “FinTech” decree-law, which outlines the regulations governing the issuance and circulation of digital versions of various financial instruments. The banks involved highlighted that this issuance is part of the European Central Bank’s (ECB) broader initiative to explore methods for wholesale fiat money settlement on blockchain platforms.

Globally, banks and asset managers are increasingly investigating the potential of tokenizing traditional financial instruments, such as bonds, credit, and funds, on blockchain networks. This transition aims to deliver operational benefits that include expedited and more transparent transaction settlements, reduced costs, and enhanced efficiency.

“This transaction illustrates how public blockchains serve as a formidable technology for financial institutions, enabling transactions that are not only faster but also more secure,” stated Niccolò Bardoscia, head of digital assets trading and investments at Intesa Sanpaolo, in a recent LinkedIn post. He further expressed, “Tokenization is setting a new benchmark for efficiency and automation in financial markets, and I am convinced that this technological shift will influence not just bonds, but all asset classes in the coming years.”