Blockchain is finally starting to catch on in capital markets. This year, OMFIF’s Digital assets report reveals two novel sources of data indicating a slow but steady gathering of momentum behind the adoption of blockchain.
First, we are delighted to present the first league tables detailing the main players in the world of blockchain bond issuance, including the top issuers, platform providers, legal advisers, exchanges and bookrunners since 2022.
The league tables reveal that the market is gathering impressive pace. Since the beginning of August 2024, 14 bonds had been issued on blockchain. With many more expected, the market should easily outstrip 2023, when 16 blockchain bonds were issued and 2022, when the figure was only nine – meaning we expect the blockchain bond market to more than double in size between 2022 and 2024.
OMFIF’s Digital assets report seeks to uncover who the key players in this long-awaited revolution are. The report also features a survey of market participants that gives insight into the changing attitudes of the market. Some 38% of respondents said they are looking at adopting distributed ledger technology or blockchain in debt issuance.
The survey reveals some fascinating insights into the concerns and expectations market participants have of the coming updates to financial market infrastructure. While almost all expect a substantial degree of tokenisation within 3-10 years, it is interesting to note that many market participants are cool on the possibility of moving to T+1 or even more rapid settlement because of the operational challenges it might entail.
The report features thought leadership from OMFIF’s experts, as well as contributions from BNP Paribas, Slovenia’s Ministry of Finance, KfW, Banque de France, Hong Kong Monetary Authority and Swiss National Bank, covering topics including cash settlement for wholesale markets, tokenisation and the changes to market structure that introducing DLT will imply.
Enter your details on the right to access the report.
Key findings:
- The share of survey participants who are considering adopting DLT and/or blockchain has increased by 9 percentage points to 38% this year from 29% in 2023.
- Only 16% of respondents indicated a preference for T+0 or T+1 settlement cycles, highlighting the risks and concerns for a significantly reduced settlement period. The most popular response was T+2 or a variable settlement period.
- Market participants would prefer wholesale central bank digital currencies for settling most securities transactions over private tokenised money solutions, with 59% of survey respondents selecting this option.
- The overwhelming majority of market participants do expect tokenisation to happen, but predict its arrival to come in the next 3-5 years and 5-10 years by 40% and 52% of survey respondents, respectively.
- As of 25 July, 14 digital bonds have been issued this year, worth $1.2 bn. In the same period last year, only 10 digital bonds had been issued between the start of 2023 up to the 25 July 2023, $1.3bn.
Partners
