UBS AG Launches Digital Bond Settled on Blockchain and Traditional Exchanges

UBS AG has launched a 375 million Swiss franc ($370 million) bond that the Swiss bank said was the world's first digital bond to be publicly traded and settled on both blockchain-based and traditional exchanges.

The three-year bond with a 2.33% coupon will be issued on the blockchain-based platform of SIX Digital Exchange (SDX) and dual-listed on SDX and the SIX Swiss Exchange.

The digital bond has the same legal status and rating as a traditional UBS AG senior unsecured note, it said in a statement.

"We are proud to leverage distributed ledger technology to launch the inaugural UBS digital bond. This shows our commitment to support the development of new financial market infrastructure," UBS Treasurer Beatriz Martin, said.

The digital bond settles via the SDX distributed ledger-based central securities depository (CSD) network. Settlement is instant and automatic and does not require a central clearing counterparty, UBS said.

Investors can settle and clear the digital bond on either SDX CSD directly or on SIX via an operational link announced last month.

UBS moves into the crypto space following comments from the company’s CEO last year classifying crypto as an “untested asset category” and urging caution from investors during the bull market.

Last month, another major traditional financial institution in Europe, Société Générale, was granted approval as a digital asset provider (DASP), allowing the French bank to provide digital assets custody and trading through a subsidiary. The bank joined other international DASP operators such as Bitpanda, Binance and eToro.