Built under the regulatory oversight of Britain’s Financial Conduct Authority (FCA), the first-of-its-kind instrument was issued by London-based luxury retail startup LuxDeco and created with the help of JP Morgan, Moody’s and others to help LuxDeco raise capital for short-term seasonal demand.
But what’s truly disruptive about the issuance isn’t the use of cryptocurrency, rather it’s that the bond will be cleared, settled and registered on the public ethereum blockchain. With a relatively short lifecycle of only one week, the bond is also part of a larger experiment to see if removing financial middlemen can make such investment vehicles more accessible to small businesses on a massive scale.
“As an entrepreneurial business we are always looking at ways to gain advantage and scale,” said the founder and CEO of LuxDeco, Jonathan Holmes, in an interview with CoinDesk. “So, if cryptocurrency becomes a valid funding and trading option we would definitely look at issuing further bonds in the future.”
And while private blockchains have largely been the purvey of CSDs and other legacy infrastructure providers, the founder and CEO of venture-backed Nivaura, Avtar Sehra, argued that the new bond shows the potential of public blockchains when applied to enterprise business models.
“What we’re showing is you can use open public infrastructure for regulated financial instruments, and this is a very critical step, because from the earliest stages we’ve always believed that public blockchains are the way forward.”