On Thursday, J.P. Morgan revealed its arrangement of a $50 million onchain US commercial paper issuance for Galaxy Digital Holdings via the Solana blockchain, marking one of the earliest such transactions on a public network in the U.S.
The offering consists of a tokenized short-term corporate bond, created and tokenized by J.P. Morgan. According to the firm, they developed the corresponding blockchain token for the bond and facilitated the settlement of its primary issuance.
The tokenized securities were sold to Franklin Templeton, an asset management firm, and Coinbase, a crypto exchange. Issuance and redemption will utilize Circle’s USDC (USDC), a stablecoin pegged to the dollar, as stated in the press release.
“We’re putting into practice the model we’ve long believed in: open, programmable infrastructure that supports institutional-grade financial products,” Jason Urban, the Global Head of Trading at Galaxy, stated.
The tokenized commercial bond market is still in its infancy, but continues to grow. Source: RWA.XYZ
Tokenizing various bonds—commercial, sovereign, and municipal—can significantly reduce costs and settlement times by removing financial intermediaries from the issuance and clearing processes. Analysts predict that this sector might attain a remarkable market capitalization of $300 billion by the year 2030.
Mainland China and Hong Kong Take Steps Towards Bond Tokenization
Hong Kong’s Monetary Authority (HKMA) has prioritized the tokenization of financial assets
They have outlined a five-year plan to transition bonds and physical assets onchain by 2030. This move aims to enhance the efficiency of cross-border settlements and advocates for integrating artificial intelligence into the financial system, as reported by the HKMA.
The total real-world tokenized asset (RWA) market capitalization is over $18.4 billion at the time of this writing. Source: RWA.XYZ
In November, Hua Xia Bank, a publicly listed financial entity connected to China’s central government, issued 4.5 billion in tokenized yuan bonds, which amounts to $600 million. This tranche, issued by Hua Xia Financial Leasing, came with a yield of 1.84% and is exclusively settled in the digital yuan.
The digital yuan, also known as the digital renminbi, is a central bank digital currency (CBDC) developed by the Chinese government since 2014.
