Shalini Nagarajan

The World Bank has initiated the first issuance of digital securities on Euroclear&#8217;s newly launched Digital Securities platform.



Euroclear&#8217;s Digital Financial Market Infrastructure (D-FMI), a platform based on distributed ledger technology, facilitates the establishment, issuance and settlement of international securities digitally, all under English law, according to a Tuesday press release.



The World Bank <a href="https://www.worldbank.org/en/news/press-release/2018/08/23/world-bank-prices-first-global-blockchain-bond-raising-a110-million">said</a> it has raised 100 million euros ($105.9 million) from the three-year digital bond, dedicated to backing its sustainable development projects, with the bond making its debut on the Luxembourg Stock Exchange.



The bond&#8217;s release involved Citi overseeing the issuance and payment processes, TD Securities serving as the dealer and Euroclear Bank functioning as the Central Securities Depository for the issuer.&nbsp;



R3, the developer behind the platform, <a href="https://r3.com/press-media/r3s-corda-powers-first-digital-bond-issuance-on-euroclears-digital-financial-market-infrastructure/">said</a> that the Corda permissioned blockchain was used for the bond issuance.



The World Bank first <a href="https://www.worldbank.org/en/news/press-release/2018/08/23/world-bank-prices-first-global-blockchain-bond-raising-a110-million">experimented</a> with blockchain bonds in 2018 by raising around $73 million.



Other experiments with blockchain-based bond issuance, <a href="https://blockworks.co/news/major-french-bank-wants-to-back-the-dai-stablecoin-with-40m-in-bonds">such as those by Société Générale</a>, have used public Ethereum.



<a href="https://blockworks.co/news/2023-year-of-asset-tokenization">Asset tokenization</a> is transforming finance by making transactions more efficient and reducing costs through digital processing.&nbsp;



It democratizes investment by breaking down high-value assets into purchasable tokens, thereby broadening market access.&nbsp;



This process enhances liquidity, turning illiquid assets like real estate or art into easily tradable forms. Additionally, it transcends geographic restrictions, creating a round-the-clock global market and facilitating smoother international transactions.



“The integration of DLT in asset issuance is a critical step forward in the evolution of our ecosystem’s digital capabilities, as we continue to deliver on our goal of becoming a fully digital and data enabled Financial Market Infrastructure,” Lieve Mostrey, Euroclear’s CEO, said in a statement.



Boston Consulting Group <a href="https://www.hubbis.com/news/tokenization-of-real-world-assets-gains-momentum-predicted-to-reach-16-trillion-industry#:~:text=According%20to%20projections%20from%20Boston,of%20%242.75%20billion%20in%20August.">forecasts</a> that by 2030, the global industry for tokenizing illiquid assets could expand to $16 trillion, accounting for 10% of the world&#8217;s gross domestic product.



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bonds

World Bank rolls out first digital bond issuance on Euroclear

Jacquelyn Melinek

<div id="highlights-block_60ccebaeca8e8" class="highlights">
 <ul>
 <li>World Bank invested over $12 billion into fossil fuel projects since the 2015 Paris climate accord, according to a report </li>
 <li>Latin Americans would rather accept bitcoin as payment instead of their local currency because it’s worthless and “people are not willing to be suppressed anymore,” Betancourt said</li>
 </ul>
 
</div>



The World Bank said this week it could not help El Salvador&#8217;s implement bitcoin as legal tender, due to “environmental and transparency shortcomings,” a spokesperson <a href="https://www.reuters.com/business/el-salvador-keep-dollar-legal-tender-seeks-world-bank-help-with-bitcoin-2021-06-16/" target="_blank" rel="noreferrer noopener">told Reuters</a>, but some market players argue that this is a “lazy excuse.”



&#8220;We are committed to helping El Salvador in numerous ways including for currency transparency and regulatory processes,&#8221; said a World Bank spokesperson in an email to Reuters. &#8220;While the government did approach us for assistance on bitcoin, this is not something the World Bank can support given the environmental and transparency shortcomings.&#8221;



But according to the World Bank’s Articles of Agreement, it might have to accept bitcoin as a currency from El Salvador if it fits the bill of the following:&nbsp;



<figure class="wp-block-image size-large is-style-default"><img loading="lazy" decoding="async" width="1024" height="539" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/06/Screen-Shot-2021-06-18-at-1.55.24-PM-1024x539.png" alt="World Bank El Salvador" class="wp-image-4961" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/06/Screen-Shot-2021-06-18-at-1.55.24-PM-1024x539.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/06/Screen-Shot-2021-06-18-at-1.55.24-PM-1024x539.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/06/Screen-Shot-2021-06-18-at-1.55.24-PM-1024x539.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/06/Screen-Shot-2021-06-18-at-1.55.24-PM-1024x539.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/06/Screen-Shot-2021-06-18-at-1.55.24-PM-1024x539.png?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2021/06/Screen-Shot-2021-06-18-at-1.55.24-PM-1024x539.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/06/Screen-Shot-2021-06-18-at-1.55.24-PM-1024x539.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/06/Screen-Shot-2021-06-18-at-1.55.24-PM-1024x539.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/06/Screen-Shot-2021-06-18-at-1.55.24-PM-1024x539.png?w=80 80w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /></figure>



Some crypto professionals find the World Bank’s argument of environmental and transparency shortcomings as an excuse and say it’s a matter of time before bitcoin is adopted worldwide.&nbsp;



“We’re just seeing the initial technology adoption, whether it be emails or blockchain there’s always resistance,” said Kevin Kang, co-founding principal of BKCoin Capital, which is a digital asset quantitative hedge fund with $65 million in assets under management.&nbsp;



“We can’t imagine the world without email now and history repeats itself. It’s about technology we’re familiar with and the World Bank hasn’t done its research&#8230;and I find it a bad joke that their concerns are on fossil fuels,” when the World Bank contributes to it, Kang said. 



The World Bank has invested a hefty amount of money &#8211; <a href="https://www.aljazeera.com/economy/2020/10/13/un-chief-warns-development-banks-to-stop-backing-fossil-fuels" target="_blank" rel="noreferrer noopener">more than $12 billion</a> &#8211; into fossil fuel projects since the 2015 Paris climate accord, according to a 2020 report by Berlin-based environmental group Urgewald. The World Bank also accepts gold as a payment, despite <a href="https://www.spglobal.com/marketintelligence/en/news-insights/blog/greenhouse-gas-and-gold-mines-nearly-1-ton-of-co2-emitted-per-ounce-of-gold-produced-in-2019" target="_blank" rel="noreferrer noopener">gold mines emitting nearly 1 ton of carbon dioxide</a> per ounce of gold produced, S&amp;P Global Market Intelligence reported.&nbsp;



“You don’t hear people arguing about ATMs using so much energy or asking when will they go carbon neutral? Yet, blockchain is one of the most carbon neutral things out there,” Kang said.&nbsp;



People who are critical of bitcoin often point out how mining the cryptocurrency harms the environment, but <a href="https://www.cnbc.com/video/2021/04/26/ark-investments-analyst-says-76-percent-of-bitcoin-miners-are-using-renewable-energy.html" target="_blank" rel="noreferrer noopener">76% of bitcoin miners are using renewable energy</a>, Yassine Elmandjra, a blockchain and cryptoasset analyst at Cathy Wood’s Ark Investment Management, said in an interview with CNBC.&nbsp;



<h3 class="wp-block-heading">No longer “willing to be suppressed anymore”&nbsp;</h3>



The World Bank’s response and denial to help El Salvador implement bitcoin came after the country’s Finance Minister Alejando Zelaya stated that it asked the World Bank for technical assistance to implement bitcoin as an official method of payment.&nbsp;



“People don’t realize that (El Salvadorians) need this and can actually use bitcoin to better themselves,” Carlos Betancourt, co-founding principal of BKCoin Capital, said during an interview with Blockworks.&nbsp;



He added that El Salvadorians can download applications on their phones, become educated and use bitcoin as payment, which would give the people the ability to transact between each other with something of value.&nbsp;



“At the end of the day there will be a whole transformation,” Betancourt said. “A lot of Latin Americans are essentially poor and it’s hard for folks down there to open bank accounts. Fact is, they may not be able to open a bank account or might not have the means to open one, but they do have cell phones and those have become a means of transaction.”&nbsp;



<figure class="wp-block-pullquote is-style-default"><blockquote>Latin Americans would rather accept bitcoin as payment instead of their local currency because it’s worthless and “people are not willing to be suppressed anymore,” Betancourt said.</blockquote></figure>



In addition to this, inflation is “crazy high” in Latin American countries and using the US dollar as an alternative is not providing the same benefits to Latin Americans anymore, Kang said.&nbsp;



“The USD has gotten worth less and less, so (these countries) are looking for alternatives and bitcoin may be volatile, but it’s nothing compared to their own inflation,” Kang said.&nbsp;



Recently, other Latin American countries’ politicians have <a href="https://cms.blockworks.co/el-salvador-approves-bitcoin-as-legal-tender-in-supermajority/" target="_blank" rel="noreferrer noopener">expressed similar support</a> for the adoption of bitcoin as legal tender, further driving normality of the cryptocurrency. Politicians from nations including Brazil, Paraguay, Panama, Argentina and Mexico have expressed positive sentiments and support for the cryptocurrency.&nbsp;



As more countries adopt bitcoin, volatility will subside as well and “it should become the norm,” Kang added.&nbsp;

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