As reported by the South China Morning Post, China Construction Bank partnered with Hong Kong-based fintech company Fusang to launch the sale of US$3 billion worth of debt on a blockchain, the first digital security issued by a Chinese bank on the technology. Blockchain tech has made issuing conventional financial instruments, such as equities and bonds, possible at much lower costs as fewer financial intermediaries are involved in the process.
The bond will be sold in the form of certificates of deposit.
According to the report, the bond will be sold in the form of certificates of deposit, usually sold at several tens of thousands of yuan each, and attract mainly professional investors or other banks. They are often used for interbank funding, specifically for small to medium-sized banks in the Asian country. By tokenizing certificates of deposit on a blockchain, retail investors can now buy the digital certificates in small amounts. China Construction Bank’s certificates of deposit will be issued through its Labuan branch with a tenor of three months.
The deal also allows investors to trade the bank’s digital certificates using bitcoin.
The deal also allows investors to trade these China Construction Bank’s digital certificates using the leading cryptocurrency bitcoin on Fusang Exchange, a cryptocurrency exchange licensed by Labuan’s financial regulator, Malaysia. The trading of the bonds, which can also be done in the US dollar, will begin this Friday. If this transaction is a success with investors, the exchange hopes to work with the state-owned bank on issuance in other currencies, including yuan, said Henry Chong, chief executive at Fusang. As a first tranche of the US$3 billion programme, the Chinese bank will make US$58 million worth of digital certificates available for public subscription.