Obligate has issued bonds using the Polygon blockchain without the involvement of any banks. Muff Trading AG, a Swiss-based physical commodities trading firm specializing in metal sourcing, issued the bonds.
Muff Trading AG used the Obligate marketplace to tokenize bonds. The size and terms of the debt issuance remain undisclosed. The recent development was followed by the launch of the Obligate platform to the general public on March 27, 2024. Using blockchain technology, Obligate, a Swiss financial intermediary, enables business organizations to issue bonds and commercial papers without relying on banks. In today’s neobanking era, it is a fine combination of effective smart contracts and conventional finance frameworks.
In accordance with the rules, a standard issuer must conduct Know Your Customer (KYC) checks prior to onboarding. In exchange for their bond, investors will get ERC 20 tokens to store in their digital wallets. These tokens can be used as collateral or as payment when the bond matures. This new trend in decentralized finance points to the imminent proliferation of on-chain debt marketplaces. To put it simply, it is a model cryptocurrency marketplace that caters to both institutional and retail investors.
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Renowned German firm Siemens has issued $64 million in bonds on Polygon with a maturity date of one year. The bond market may be the largest financial market, yet it serves the needs of huge corporations quite effectively. Fascinatingly, bond issuers and investors can connect directly through blockchain-based protocols, eliminating the need for middlemen. The Polygon Network and other blockchain-based protocols will allow small businesses to access bond markets for financing.
This is the first time that Muff Trading is issuing bonds and choosing Obligate to access markets. It is a fact that there is a rough environment these days, with traditional banking providers serving as midsize commodity trading firms.
Obligate has notified the issuer that a 0.5% issuance fee will be deducted from the amount of debt paid. Muff’s issuance has circumvented the conventional fiat currency payment rail of financial institutions. The debt of Muff Trading AG, which is financed by USDC stablecoin from Circle, is secured by receivables that occurred at Apex Group.
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Apex Group, a financial services provider with assets of $200 billion, is an Obligate corporate partner. The utilization of blockchain technology for bond issuance is pertinent in the present day, when current market conditions constrain conventional lending channels.
