Italian law is utilized to issue a digital bond on the Polygon blockchain by CDP.
CDP's Digital Bond Marks a Novel Approach in the Digital Bond Market
In a groundbreaking move, the development bank CDP has issued a digital bond, marking a significant step forward in the digital bond market. This digital bond issuance is part of the European Central Bank's wholesale DLT settlement trials, making it an important test case for the future of digital bond transactions.
The digital bond is unique in several ways. It is the first to use Italy's DLT Pilot Regime, although it is not part of the Pilot Regime itself. The issuance is being conducted on the Polygon public blockchain, a novel approach in the digital bond market.
The digital bond requires a Digital Register, a log of the real names and details of the owners of the securities. This Digital Register is maintained by a Digital Register Manager authorized by Consob, Italy's securities regulator. Unfortunately, the name of the Digital Register Manager who managed the digital registration for CDP's digital bond is not currently known.
The payment for the digital bond was made in central bank money using the Bank of Italy's TIPS Hash Link solution. This payment process is connected to the TIPS payment system, providing connectivity between a DLT and the traditional financial system.
The digital bond issuance was underwritten by Intesa Sanpaolo as the sole investor. This means that Intesa Sanpaolo purchased the entire digital bond from CDP, providing the necessary funding for the project.
It's worth noting that the digital bond settlement used Italy's 'Fintech decree' law. This law, enacted in 2017, provides a legal framework for the use of DLT and smart contracts in financial transactions.
This digital bond issuance is a significant milestone in the development of the digital bond market. It demonstrates the potential of blockchain technology to streamline and secure financial transactions, and it paves the way for future digital bond issuances and investments. As the digital bond market continues to grow and evolve, we can expect to see more innovative uses of blockchain technology in financial transactions.
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