China Construction Bank Corporation Labuan Branch (“CCB Labuan”), a tier-1 branch of Beijing-headquartered China Construction Bank Corporation (“CCB”), will be the lead arranger for the first publicly listed debt security on a blockchain, to be tradeable on FUSANG Exchange. The bond, Longbond SR Notes (“LBFEB21”), will be issued by Longbond Ltd., a securitisation Special Purpose Vehicle (“SPV”) set up with the sole purpose of issuing digital bonds and depositing the proceeds with CCB Labuan. CCB Labuan will act as the lead arranger and listing sponsor for the deal.
This “Longbond” represents the first digital security to be listed on a public stock exchange that is directly accessible by retail investors. Felix Feng Qi, Principal Officer of CCB Labuan, said, “CCB Labuan is happy to play its role as lead arranger for the first publicly listed debt security on a blockchain. The issuance serves to narrow the divide between FinTech and the wider financial markets. CCB Labuan will continue to work on expanding the technological boundaries to provide value added products and services to our customers, clients, and associates.”
The bond will give investors access to bank-secured deposits at an annualised rate of LIBOR +50bps (~0.70%), considerably higher than market interest rates for typical fixed deposits. It represents direct, unconditional, unsubordinated, and fully secured obligations that are ultimately backed by the balance sheet of the world’s second-largest bank. It will be issued at a discount and can be traded on FUSANG Exchange prior to maturity, in USD and Bitcoin (“BTC”), with a total program target size of USD 3 billion.
The Labuan Financial Services Authority (“Labuan FSA”) has been keen to drive digital transformation in the financial services industry. Datuk Danial Mah Abdullah, Labuan FSA’s Director-General, stated that “Labuan FSA encourages these kinds of collaborative efforts among Labuan financial institutions to facilitate cross pollination business and generate a more vibrant market.”
With this digital bond, both retail and sophisticated investors globally will have direct access through the FUSANG Exchange with investment amounts of as little as USD 100. Investors will also be able to trade directly in/out of the bond using BTC. Unlike many other investments available to retail investors, this landmark offering will undoubtedly bring legitimacy and investor confidence to the world of cryptocurrency and decentralised finance (“DeFi”), which is wrought with lawsuits and concerns surrounding investor protection.
Henry Chong, CEO of FUSANG Exchange, sees the issuance of this digital bond as perfectly suited for FUSANG. “Issuers no longer need to operate in a fragmented environment with multiple process flows as FUSANG’s end-to-end platform streamlines their needs, from issuance to listing, in one place. Moreover, global investors can now benefit from access to an investment previously reserved for only the largest institutions, together with low and transparent fees,” said Mr. Chong.
The implementation of blockchain technology enables financial inclusion, reduces service delivery costs, and increases transactional efficiency. Allowing direct access to bonds for the general public, which has never been done before, levels the playing field, regardless of investor type or their location. Mr. Chong continued, “FUSANG is excited to partner with CCB on this landmark issuance. We think this is the perfect showcase for how digital securities can power financial inclusion, by combining the exciting advancements in blockchain technology with the tokenisation of traditional securities. We believe that this will be the start of Crypto 2.0. – the true institutionalisation of digital asset products.”
About FUSANG Exchange
FUSANG Exchange Ltd is licensed in Labuan, Malaysia as a Securities Exchange under Part IX, Section 134 of the Labuan Financial Services and Securities Act (LFSSA). FUSANG Exchange is the first fully operational stock exchange in Asia that allows companies to go public through a digital IPO accessible by all investors across the world, be it institutional or retail. FUSANG supports the trading of both digital securities and cryptocurrencies.
To learn more about FUSANG, please visit fusang.co.
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About CCB Labuan
China Construction Bank Corporation Labuan Branch is a tier-1 branch of China Construction Bank Corporation, registered in the Labuan IBFC in Malaysia. CCB Labuan obtained its Labuan banking license on 20 June 2019 and commenced its business on 3 September 2019. CCB Labuan has a full-fledged commercial Labuan banking license granted by the Labuan FSA. Labuan FSA has further authorised CCBL to conduct digital banking activities and appointed CCB Labuan as the designated RMB clearing bank in the Labuan IBFC.