European Central Bank Study

Intesa Sanpaolo said in a July 18 statement that the transaction was part of a study run by the European Central Bank to find fresh ideas for central bank money settlement of wholesale transactions executed on blockchains.

Since Italy adopted its FinTech decree law, which controls the issuing and distribution of financial instruments in digital form, this was the first transaction of its type.

With a fixed rate of 3.63% computed yearly, Cassa Depositi’s $27.2 million (25 million euro) bond will mature over four months, ending on November 18, 2024. The lone institutional investor in the trial was Intesa Sanpaolo.

The same day, the cash flow was cleared using the “TIPS Hash Link” program from the Bank of Italy, which enables blockchain and conventional payment system compatibility.

Future Impact of Blockchain

“This transaction shows how public blockchains are a powerful technology for financial institutions, making transactions faster and safer,” Niccolò Bardoscia, head of digital assets trading and investments at Intesa Sanpaolo, said in a July 18 LinkedIn post.

“This technical change will affect not only bonds but every asset class over the coming years.”

BlackRock’s CEO, Larry Fink, has also supported tokenization since he thinks every stock and bond will eventually travel on blockchain rails.

Professor Hilary Allen of financial law warned the US Congress last month that public blockchains are too “fragile” to tokenize trillions of real-world assets since they are very efficient and cannot manage significant transaction volumes.

While fellow consulting company McKinsey projected a more meager $2 trillion during the same period, Boston Consulting Group projects the tokenized asset market may reach $16 trillion by 2030.

Data aggregated by 21Shares on Dune Analytics shows over $89 billion of tokenized assets on blockchain rails. Polygon ranks fourth among blockchains by tokenized value at $40.3 million, trailing only Ethereum, Stellar, and Mantle.

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