J.P. Morgan taps Solana for Galaxy’s tokenized corporate bond issuance

Financial services company J.P. Morgan announced on Thursday that it arranged a $50 million onchain US commercial paper issuance for Galaxy Digital Holdings on the Solana blockchain, one of the earliest debt deals executed on a public network in the United States.

The offering, a tokenized short-term corporate bond, was tokenized by J.P. Morgan. According to the company, it created the corresponding blockchain token for the bond and handled the settlement of the primary issuance.

The tokenized securities were sold to asset manager Franklin Templeton and crypto exchange Coinbase, while issuance and redemption will be paid in Circle’s $USDC ($USDC) dollar-pegged stablecoin, according to the press release.

“We’re putting into practice the model we’ve long believed in: open, programmable infrastructure that supports institutional-grade financial products,” Jason Urban, the global head of trading at Galaxy, said.

The tokenized commercial bond market is still in its infancy, but continues to grow. Source: RWA.XYZ

Tokenizing commercial, sovereign and municipal bonds can lower costs and settlement times by removing financial intermediaries from the issuance and clearing process. Analysts forecast that the sector could grow to a $300 billion market capitalization by 2030.

Related: State Street, Galaxy and Ondo join tokenized cash race with 24/7 sweep fund

Mainland China, Hong Kong tokenize bonds

Hong Kong’s Monetary Authority (HKMA) has prioritized the tokenization of financial assets, announcing a five-year plan to bring bonds and physical assets onchain by 2030.

Bringing real-world assets onchain makes cross-border settlement more efficient and positions Hong Kong for the integration of artificial intelligence into the financial system, according to the HKMA.

The total real-world tokenized asset (RWA) market capitalization is over $18.4 billion at the time of this writing. Source: RWA.XYZ

In November, Hua Xia Bank, a publicly traded financial services company with ties to China’s central government, issued 4.5 billion in tokenized yuan bonds, equivalent to $600 million.

The bond tranche was issued by Hua Xia Financial Leasing, featured a 1.84% yield, and is settled exclusively in the digital yuan.

The digital yuan, also known as the digital renminbi, is a central bank digital currency (CBDC) issued by China’s government, which began developing it in 2014.

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