OCBC (SGX: O39) says that it has become the first bank in Singapore to launch the sale of tokenized bonds to corporate accredited investors (corporate AIs), which are corporations that have net assets exceeding SGD 10 million.
The tokenized bonds, which reference investment grade bonds, “are structured based on the client’s desired tenor and yield.”
They are then minted and transferred to the client’s wallet “created on OCBC’s asset tokenization platform.”
This is reportedly the second commercial use case “using OCBC’s blockchain infrastructure which was developed in 2022.”
The first commercial use case was a partnership with LTA to “pilot a blockchain-based conditional payment solution for construction projects in 2024.”
The launch is in line with Singapore’s push to “commercialize and scale usage of tokenized assets.”
Corporate bonds usually have a high minimum “transaction size of S$250,000, which could contribute to concentration risk.”
Tokenization addresses this as it enables fractional ownership – “a corporate AI client can subscribe to tokens at S$1,000 denominations.”
This in turn facilitates the building of more diversified portfolios “with a range of assets.”
Clients can similarly liquidate investments in “S$1,000 denominations to meet cashflow requirements.”
OCBC’s asset tokenization capability – which streamlines the entire lifecycle from creation and “minting to ownership transfers and custody, and redemption through token burning – will be progressively extended beyond fixed income assets.”
This will enable OCBC to tokenize a range of assets for its clients, “including structured products and funds.”
Mr Kenneth Lai, Head of Global Markets at OCBC, said:
“As an industry, we have made significant strides in understanding and recognizing the vast potential of tokenized assets. As we shift our focus towards commercialization, we are proud to have developed bespoke tokenized bonds via our asset tokenization platform. This innovation provides flexible and liquid investment alternatives, bringing tangible benefits to our customers. Leveraging our asset tokenisation capabilities, we will progressively expand our offerings to include other types of tokenised assets.”
OCBC completed its inaugural transaction for a mid-sized manufacturing client in Singapore in Nov 2024, minting “a tokenized bond with a tenor of less than a year.”
This met the needs of the client as they intended to “pivot from fixed deposits and diversify their investment portfolio.”
Other corporate AIs that have favored fixed deposits in “a high-interest rate environment, may similarly view tokenised bonds as a viable alternative as interest rates fall.”
The transaction was settled within the same business day from the debiting of the client’s bank account to the “transferring of digital tokens from OCBC to the client’s wallet which is custodized with OCBC.”
Traditional bond transactions usually “take 5 days for settlement.”
This was the client’s first usage of tokenized assets.