AFME urges European issuers to use blockchain to tokenize bonds

The association’s members also called on policymakers to create a favorable regulatory framework to facilitate the adoption of the technology

06.08.2024 - 14:10

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What’s new? The Association for Financial Markets in Europe (AFME) has published a roadmap for scaling capital markets with blockchain technology. AFME urged issuers to consider using blockchain technology to tokenize securities, and policymakers to create a supportive regulatory framework to facilitate the adoption of the technology, all of which will contribute to market transformation.

Press release

What else is known? AFME representatives write that the global volume of government bonds issued on blockchain this year has already exceeded $1 billion, which is a record compared to the results of previous years.

According to AFME, the processes of issuing and distributing blockchain bonds are not different from those in the traditional market, and in both cases, the economic risks are the same. However, the use of blockchain can bring a number of advantages over traditional infrastructure.

These benefits include innovation in capital markets, enabled by the ability to program accounts in a more cost-effective manner, as well as reduced risk of a one-time failure in financial market infrastructure.

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Ultimately, these benefits could lower costs for investors, as well as improve the efficiency and resilience of European capital markets, and even increase liquidity, the association emphasized.

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