Siemens, a German technology conglomerate, recently issued its second digital bond valued at €300 million, utilizing the SWIAT permissioned blockchain. The one-year bond saw settlement completed in just minutes using Germany’s Trigger solution, automating central bank payments through the TARGET 2 system. This rapid settlement stands in stark contrast to Siemens’ previous €60 million bond issued on the Polygon blockchain, which required a two-day settlement. The issuance is part of the European Central Bank’s trials on wholesale Distributed Ledger Technology settlement, showcasing Siemens’ commitment to driving digital solutions for financial markets.
Classified as a crypto security under Germany’s Electronic Securities Act (eWpG), Siemens’ digital bond is the largest eWpG bond issued to date. By June 2024, total eWpG digital securities issuances were estimated at €236 million, a figure that has grown thanks to the ECB’s trials. Key investors in this bond issuance included BayernLB, DZ BANK, Helaba, and LBBW, with Deutsche Bank handling settlement using the Bundesbank Trigger Solution. DekaBank serves as the bond registrar, tracking asset holders for these bearer bonds. Peter Rathgeb, Corporate Treasurer at Siemens AG, highlighted the potential of this new technology, emphasizing Siemens’ leading role in shaping the digital transformation of financial markets.
Some experts have cast doubt on a recent projection suggesting that tokenized real-world assets (RWAs) could reach $30 trillion by 2030. Jamie Coutts, chief crypto analyst at Real Vision, believes a more realistic valuation is closer to $1.3 trillion. Coutts pointed out that if the current compound annual growth rate of 121% for tokenized assets continues, the market could indeed reach $1.3 trillion by 2030. Wall Street projects that $10 to $30 trillion in traditional assets will be tokenized over the next 5 to 10 years, with some experts providing more conservative estimates on the potential growth of tokenized assets.
McKinsey & Company reported that tokenized financial assets have had a “cold start” but are still expected to grow to a $2 trillion market by 2030. Meanwhile, a report by the Global Financial Markets Association (GFMA) and Boston Consulting Group estimates the global value of tokenized illiquid assets to reach $16 trillion by 2030. Citigroup’s more conservative estimates suggest that $4 trillion to $5 trillion worth of tokenized digital securities could be minted by 2030, showing the potential for significant growth in the tokenization market. Major companies like Goldman Sachs are making moves in the tokenization space, planning to launch new tokenization products driven by growing client interest.
Siemens’ issuance of a digital bond on the SWIAT permissioned blockchain demonstrates the company’s innovative spirit and commitment to driving digital solutions in financial markets. This issuance, part of the ECB’s trials on wholesale DLT settlement, showcases the potential for rapid settlement times using blockchain technology. With key investors involved and a leading role in shaping the digital transformation of financial markets, Siemens is paving the way for further advancements in the tokenization space. The industry’s potential growth in tokenized assets presents both challenges and opportunities, with experts providing varying estimates on the market’s future size and value. As major players like Goldman Sachs enter the tokenization space, the landscape of digital securities is set to evolve significantly in the coming years.
