Today, we’re proud to announce our participation in a Proof of Concept (PoC) for the issuance and clearing of digital bonds by the State of Israel. Utilizing smart contracts and tokenization technology, this first-of-its-kind digital bond will be issued through the Israel Ministry of Finance and Tel Aviv Stock Exchange (TASE).
The management of government debt is a highly complex area, requiring synchronization between multiple systems and incorporating local and international parties. Debt issuance by governments is also subject to strict monitoring and guidance. The Israeli government will utilize Fireblocks to carry out this multifaceted and highly regulated process.
Taking the first digital government bond live with Fireblocks
This PoC will tokenize a new series of bonds utilizing Fireblocks in two major areas – minting of the tokenized bonds through secure smart contract calls via the API, and for treasury management of the bonds.
Local and foreign primary dealers will participate in a “live test,” during which they will be connected to the TASE dedicated, DLT-based system. Acquired units of the new bonds will be issued into Fireblocks wallets of the acquiring participants, while the issuance consideration will be transferred from those wallets to the wallet of the issuer (the State of Israel).
Digitizing the financial system takes the collaborative efforts of both the public and private sectors. Fireblocks is honored to work with the Israel Ministry of Finance, the Tel Aviv Stock Exchange, and VMWare to develop the first digital state bond in Israel. With this PoC, Fireblocks was able to build a foundational technology layer for the issuance of digital bonds that is secure, highly-scalable, and may be deployed by TASE for any other innovative digital asset use cases in the future as they strive to increase capital markets accessibility for all.
Paving the way for a fully digital capital markets ecosystem
The issuance of this digital government bond is truly groundbreaking – not only because it signifies a large step toward tokenizing important financial instruments, but also because it tests blockchain as a new foundational infrastructure for regulated capital markets.
This project represents a first and important foothold for the incorporation of blockchain technology into financial mechanisms in Israel and beyond, and will serve as the foundation for the upgrading of other systems to become blockchain-based in future. The implementation of such technologies will streamline processes, reduce costs, shorten the duration of issuance and clearing of state bonds, improve transparency, and mitigate risks.
The financial markets are undergoing drastic transformations in recent years, with the introduction of revolutionary technologies that affect the manner in which customers worldwide operate and invest. As a global technology leader, we hope to see Israel spearhead financial technology as well, being the first to implement cutting-edge technologies and upgrade the capital market, making it more accessible to the public. I would like to thank the Office of the Accountant General and all those partaking in this important project, which is the first and important step to creating a more advanced and accessible capital market.
