The second-biggest bank in the world is the latest institution to embrace bitcoin.
China Construction Bank (CCB) has announced that it is working with digital securities exchange Fusang to raise up to $3 billion through a publicly-listed debt security on a blockchain.
A special purpose vehicle has been established for the purpose of issuing the “Longbond.” Retail investors will be able to purchase digital tokens on the Fusang exchange using dollars or bitcoin, with investments of as little as $100, Finextra reports.
The tokens will be backed by deposits at CCB’s branch on the Malaysian tax-haven island of Labuan. Fusang said it will use blockchain technology to record ownership.
The bond will give retail investors access to an investment previously unavailable to them, according to the partners, while also boosting investor confidence in cryptocurrency and decentralized finance.
Felix Feng Qi, principal officer, CCB Labuan, said: “CCB Labuan is happy to play its role as lead arranger for the first publicly listed debt security on a blockchain. The issuance serves to narrow the divide between fintech and the wider financial markets.”
Henry Chong, CEO, Fusang, added: “We think this is the perfect showcase for how digital securities can power financial inclusion, by combining the exciting advancements in blockchain technology with the tokenisation of traditional securities. We believe that this will be the start of Crypto 2.0. – the true institutionalisation of digital asset products.”
Crypto YouTuber Lark Davis said it was yet more good news for mainstream crypto adoption.
“This is another insanely big story,” said Davis, referring to recent crypto adoption announcements by firms such as PayPal and Square. “It’s a big story for adoption, especially considering this is a Chinese state-owned bank that is officially accepting bitcoin in exchange for their bonds.”
However, Davis questioned the fiscal wisdom of trading bitcoin for paper – many analysts believe bitcoin will be worth six figures in a year’s time.
“I don’t know who the heck wants to buy those bonds in exchange for bitcoin … it’s a crazy trade if you ask me.”