Russian telecom giant Megafon adopts blockchain for bond issuance
Cryptocurrencies are just one of the ways to utilize blockchain technology. A trustless ledger and a public log of activity enables automated continuous audit of bonds across the whole lifecycle, from issuance to the payouts. Using a blockchain significantly lowers overhead costs associated with this mechanism of raising capital, as well as potentially opens up investment opportunities to international investors.
Yesterday, russian Megafon and austrian Raiffeisenbank have announced a successful bond issuance for roughly $8,600,000 conducted entirely on a blockchain and fully compliant with the russian legislation. The bond matures in December 2017.
According to a spokesperson from Megafon, they've decided to do a small bond issuance on the blockchain in order to test out the technology and work through the legal hurdles now, so they have a working blueprint for future issuances. If Megafon comes out of this experiment satisfied, they plan to issue more bonds on the blockchain going forward, as well as utilize blockchain for some internal operations.
Earlier this year Daimler AG, the german automaker and the owner of Mercedes-Benz brand, was the first large company to issue bonds on the blockchain, which allowed them to raise $100,000,000. In their case, however, the blockchain bonds were issued in parallel with traditional bank, pen and paper bonds, and did not have any legal power behind them. But as we see more successful blockchain bond issuances we will eventually see blockchains being used more often than big banks.