The City of Quincy on the outskirts of Boston Massachusetts has issued a $10 million municipal bond utilizing blockchain. JP Morgan was the only underwriter of the tax-exempt seven yr bonds and the issuance used the Onyx non-public permissioned blockchain.
This isn’t the primary time JP Morgan has used distributed ledger expertise (DLT) for debt issuance. In 2018 it issued a Yankee certificates of deposit for the National Bank of Canada in parallel on the blockchain.
Nonetheless, the Quincy issuance marks the formal launch of one other utility for Onyx Digital Belongings, the JP Morgan Digital Debt Service. Current Onyx tokenization options embody intraday repo and the Tokenized Collateral Network. Moreover, Onyx has options for funds such as JPM Coin Systems and Liink for interbank knowledge sharing.
“Over time, we should always see blockchain expertise usher in decrease issuance prices, enhanced liquidity, and diminished settlement instances,” mentioned Rick Coscia, Quincy’s strategic asset supervisor as reported by Bondbuyer.
With DLT can muni bond consumers embody the neighborhood?
The argument that tokenization brings extra liquidity is controversial within the blockchain sector. On the one hand, automation helps to chop issuance prices, making it viable to make use of smaller denominations. In flip this may make it accessible to a wider pool of individuals. Nonetheless, many enterprise blockchain options presently lack integration with different networks and conventional platforms. To Mr. Coscia’s level, that ought to change over time.
“I look ahead to the day when Quincy residents should buy bonds to fund tasks in Quincy that immediately impacts and improves their high quality of life,” added Quincy Mayor Thomas P. Koch.
Joseph Lubin, the CEO of blockchain agency Consensys, voiced that sentiment when it acquired a US dealer with the intention of launching “mini munis.” Most municipal bonds have minimal funding quantities of $5,000.
“Tokenized, digital municipal bonds will help restore the muni market to its authentic community-driven spirit by making the securities extra accessible to on a regular basis citizen traders and cheaper for communities of all sizes,” mentioned Lubin on the time. JP Morgan is a Consensys investor. We’re not conscious of the Consensys subsidiary issuing municipal bonds.
Nonetheless, one other startup Alphaledger used DLT for municipal bond issuance in late 2022.
