Securities firm Hitachi (NASDAQ: HTHIY) has unveiled plans to launch a tokenized green bond in partnership with leading blockchain technology companies and financial services providers.
Hitachi plans to team up with Japanese financial giant Nomura (NASDAQ: NRSCF), JPXI, and BOOSTRY. According to reports, Nomura’s role in the play will be the distribution of the bonds to investors. At the same time, JPXI will provide critical data to investors associated with the tracking of CO2 emissions.
The bonds are expected to be listed on a consortium network launched by Nomura, BOOSTRY, and JPXI, dubbed the “ibet for Fin” network. The network eliminates the need for a Central Securities Depository (CSD) by using blockchain technology as a securities registry.
Hitachi’s role will center around monitoring carbon emissions stifled through renewable energy generation activities using a solution that has earned praise from industry participants. Unlike traditional bond offerings, investors will have unfettered access to the data instead of relying on annual reports with reading logged on blockchain.
“For instance, a green bond issuer installs an IoT monitoring sensor on a renewable energy generator and records the raw data on the blockchain,” said Hitachi. “There’s no human intervention in the whole series of processes, so the data’s integrity and a high level of reliability are maintained.”
Hitachi says the earnings from the issuance will be deployed towards the construction costs of an environmentally friendly complex from 2022, running into millions of dollars.
Participants in the venture have previously dabbled with tokenization following a digital green bond launch by Japan Exchange Group (JPX) (NASDAQ: JPXGY), garnering sufficient experience in the field. Despite the knowledge obtained in their previous forays, Hitachi and other participants still have to grapple with the challenge of a typical digital currency for settlements and the absence of a thriving secondary market.
Pundits are keeping their eyes peeled on an offering by the Osaka Digital Exchange (ODX), seeking to solve the challenge of secondary markets with bond offerings following its regulatory approval.
Green bonds gaining popularity
Outside of Japan, several jurisdictions are experimenting with green bonds using blockchain technology, citing several benefits, including safety, speed, and cost savings. The Hong Kong Monetary Authority’s (HKMA) attempt via its Project Evergreen was applauded as a “huge success,” hinting at a full-scale rollout following the establishing of a proper regulatory framework.
“It also showed the potential in DLT to enhance efficiency, liquidity, and transparency in bond markets,” said HKMA CEO Eddie Yue.
Europe and the United Kingdom have launched sandboxes to experiment with digital bonds, with the Philippines and Taiwan joining the fray.
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