Corporate Finance / Capital Markets

How Siemens issued Germany's first digital bond on a public blockchain under eWpG

Siemens issued one of the first digital bonds in Germany under the Electronic Securities Act (eWpG), using a public blockchain to eliminate paper-based certificates and enable direct sale to investors.

Summary

Corporate tokenization becomes meaningful when it connects to regulated legal frameworks. Siemens issued one of the first digital bonds in Germany under the Electronic Securities Act (eWpG), using a public blockchain. Benefits included eliminating paper-based global certificates and enabling direct sale to investors.

What happened

Siemens issued a €60 million bond with one-year maturity under eWpG, underpinned by a public blockchain, eliminating the need for paper-based global certificates and central clearing.

According to Siemens' official press release, the company issued one of the first digital bonds in Germany using blockchain technology under the new Electronic Securities Act (eWpG). This €60 million bond with one-year maturity represents a significant milestone—a major industrial corporation utilizing blockchain for capital markets issuance within a fully regulated framework. The eWpG, enacted in 2021, created the legal foundation for electronic securities in Germany, enabling securities to be issued without traditional paper-based global certificates.

The choice of a public blockchain for the issuance is notable. While many institutional blockchain projects use private or permissioned networks, Siemens opted for a public blockchain, providing transparency and leveraging established network security. This decision required careful consideration of privacy requirements, regulatory compliance, and operational control. The successful issuance demonstrates that public blockchain infrastructure can meet the requirements of regulated securities issuance when properly implemented.

Eliminating paper-based global certificates addresses a genuine operational inefficiency. Traditional bond issuance involves creating physical or quasi-physical certificates that are deposited with central securities depositories, which then maintain records of ownership changes. This creates a multi-layered system with reconciliation requirements between issuer records, depository records, and investor records. Blockchain-based issuance consolidates these records into a single source of truth, reducing complexity and potential for discrepancies.

The direct-to-investor distribution model tested by Siemens could have broader implications for corporate bond markets. Traditional bond distribution involves underwriting banks, dealers, and sometimes multiple intermediaries before securities reach end investors. Direct issuance on blockchain potentially enables issuers to reach investors more efficiently, though the full implications for market structure and liquidity remain to be understood as more issuances occur.

Siemens' role as an early mover in German digital bond issuance reflects the company's broader digitalization strategy and provides valuable operational learning. For other corporations considering digital bond issuance, Siemens' experience with regulatory process, technology implementation, and investor reception provides a reference point. The successful completion of the bond's one-year term and subsequent larger issuances by Siemens have validated the approach and encouraged other corporate issuers to explore similar options.

Business goal

Impact

Sources