Singapore’s OCBC bank launches fractional tokenized bonds for corporates

Singapore’s OCBC Bank has launched a blockchain-based solution that allows corporate clients to invest in fractionalized tokenized bonds, marking a shift in corporate treasury management.

The bank’s accredited investors, defined as entities with assets above S$10 million ($7.3 million), can now purchase bond units starting at S$1,000; This is a significant drop from the traditional minimum of S$250,000, according to Ledger Insights.

The new solution also allows investors to customize bond duration and coupon rates. These tokenized bonds provide institutional clients with more private and liquid investment options by referencing existing investment-grade assets.

For example, a mid-sized construction firm recently used the service to diversify treasury holdings beyond fixed deposits, Ledger Insights reported.

Payment times have also improved; transactions now take just one day compared to the typical five days.

This initiative builds on OCBC’s previous blockchain projects. The bank partnered with ADDX for structured product issuances in 2023 and introduced a contingent payment solution using blockchain. The system has facilitated automatic payments for the Land Transport Authority, processing over S$22 million in payments by the end of 2024.

Global banks and tokenization

Global banks are starting to explore tokenization for financial transactions. Last autumn, the Reserve Bank of Australia launched a consultation on Project Acacia, a three-year initiative exploring wholesale central bank digital currency and tokenized asset markets.

The project has received public feedback on the potential benefits of tokenizing assets and using CBDCs for payment.

Also in June 2024, Germany’s state bank Kreditanstalt fuer Wiederaufbau started using blockchain technology with its first digital bond.