PV01 Completes Proof of Concept for On-Chain Debt Market with Digital Bond Issuance on Ethereum

PV01 has successfully issued the first digital native bond on the public Ethereum blockchain under English law.

The $5M bond, denominated in USDC and backed by a US Treasury Bill, was purchased by a group of blue-chip stablecoin investors, including B2C2, Keyrock, and BlockTower Capital.

TLDR

• PV01 has issued the first digital native bond on the public Ethereum blockchain under English law, backed by a US Treasury Bill and earning a yield of 5.10%.
• The bond was purchased by blue-chip stablecoin investors, including B2C2, Keyrock, and BlockTower Capital, for a total of $5M denominated in USDC.
• The bond’s entire lifecycle, from issuance to redemption, took place on-chain, without the need for a central security depository, completing the first step in PV01’s mission to develop an on-chain debt market.
• The digital bond represents a fusion of traditional bonds’ security and reliability with the immutability and transparency of blockchain technology, creating a groundbreaking financial instrument.
• PV01’s commitment to developing a trusted institutional-grade platform is reflected in Bermuda’s reputation as a jurisdiction of choice for digital asset companies and the legal expertise of Hogan Lovells and Walkers Global in facilitating the bond’s issuance.

Issued on April 8th and redeemed a week later, the bond earned a yield of 5.10% and was represented by a transferable token that can also be used as collateral.

By leveraging Coinbase to convert USDC, the digital bond enables lightning-fast same-day investment in US treasuries, with settlement occurring on the blockchain in a matter of seconds, significantly faster than traditional bonds.

This issuance marks the completion of PV01’s proof of concept, following their successful $9M fundraising last year to evolve the debt capital markets.

The company structured and led the digital issuance out of a dedicated vehicle, with the proceeds used to purchase a US Treasury Bill and exchanged for a corresponding ERC-20 bond token, backed one-for-one by the government bond.

The entire lifecycle of this digitally native asset took place on-chain, from issuance to settlement, trading, transfer, and redemption, without the need for a central security depository. This achievement completes the first step in PV01’s mission to develop the first-of-its-kind on-chain debt market, revolutionizing the way bonds are issued, traded, and settled.

Industry leaders have praised PV01’s innovative approach to bond issuance and its potential impact on financial markets. Thomas Restout, CEO of B2C2, described PV01’s bonds as “a crucial innovation in financial plumbing,” highlighting the ability to fully change the ownership of bonds on-chain as an opportunity to use fast-moving and safe collateral to support trading activity with exchanges and counterparties.

Kevin de Patoul, CEO of Keyrock, emphasized the significance of the digital bond’s fusion of traditional bonds’ security and reliability with the immutability and transparency inherent in blockchain technology.

He stated,

“We are thrilled to collaborate with PV01 and honored to be among the pioneers in the tokenization of bonds. This initiative aligns seamlessly with Keyrock’s overarching mission to tokenize all forms of value, ushering in a new era of financial innovation.”

PV01’s commitment to developing a trusted institutional-grade platform that brings the fixed income market on-chain is reflected in both Bermuda’s leading reputation as the jurisdiction of choice for digital asset companies and the combined legal expertise of Hogan Lovells and Walkers Global.

These legal firms played a crucial role in facilitating the first digital native bond issued on a public blockchain under English Law, ensuring the highest standards of legal compliance and regulatory oversight.

The successful issuance of PV01’s digital bond marks a significant step forward in the evolution of debt capital markets, demonstrating the immense potential of blockchain technology to transform traditional financial instruments.

By combining the security and reliability of traditional bonds with the immutability and transparency of blockchain, PV01 has created a groundbreaking financial instrument that offers investors a new level of efficiency, accessibility, and liquidity.