China Construction Bank Partnership with a Hong Kong-based fintech too Issued the first blockchain-based digital security from a Chinese financial institution.
CCB, one of the four most important banks in the country or also known as the “Big Four”, From autumn 2020, it will be the second largest bank in the world in terms of total assets.
The bank’s plan with the new blockchain-based debt issuance, collects a total of up to $ 3 billionStarting with a tranche of $ 58 million from individuals and institutions. The digital bonds will be issued through CCB’s offshore branch in Labuan, Malaysiawith a minimum of $ 100 each and a term of three months. You pay annual interest of Libor plus 50 basis points, or about 0.75%.
The innovation is that these bonds are used as a Token deposit certificates on the blockchain networkthat supports the issuance of these retail bonds; Bonds that are not based on blockchain tend to sell at higher lows and are therefore restricted to professional investors or other banks.
In addition, the tokenized certificates of deposit can be traded on the Fusan exchange. The exchange that is regulated in Labuan, will start live bond trading on November 13th. Since Fusan supports cryptocurrency trading, traders can exchange Bitcoin (BTC) for US dollars to buy the bonds. Transactions are charged with a commission.
The CEO of Fusang, Henry Chongtold reporters when the bonds are popularen the digital exchange intends to bring similar products to other currencies. The 0.75% annualized bond rate is higher than most dollar bank deposit rates, the Wall Street Journal has pointed out.
United States and China tax residents and companies or persons in Iran and North Korea, won’t be able to buy digital security. All proceeds from the issue will be deposited with CCB’s Labuan offshore branch. Labuan is a small island and is called a tax haven by the WSJ.
CCB trades “not in bitcoins or cryptocurrencies”, but “in bank deposits, which is our core business”.underlined the COO of CCB Malaysia, Steven Wong. However, the offer is heralded as a major innovation. This is “the first publicly traded bond on a blockchain network,” he said. Felix Feng Qi, CEO of CCB’s Malaysia Overseas Business and Chief Executive Officer of CCB Labuan Branch.