Blockchain asset tokenization helps local debt issuance

Source: Securities Daily • Finance Court No. 1 Author: OF WOMAN: China Tong Guang, chief economist

Bo Sheng: Resident of BTV "Decoding Blockchain"

The era of the digital economy has arrived and is unstoppable. The combined application of blockchain technology and finance as an innovative infrastructure not only brings a better experience to consumers, but the key is to solve the problems of security and fair distribution. It is conceivable that if the blockchain is combined with the local government bonds that are facing the public, it will not only help improve the issuance efficiency, but also improve the liquidity of the bonds.

The State Council executive meeting issued a special debt quota for 2020 in advance, and the market is expected to reach a maximum of 1.29 trillion yuan. Undoubtedly, the local government is relieved, but this part of the acceleration of infrastructure construction is one of the important starting points for counter-cyclical regulation, which will help to further increase the pace and scale of local bond issuance. .

Blockchain helps local bonds achieve tokenization


Although the current debt issuance mechanism can solve the problems of local governments in the area of ​​special construction investment, there are still problems such as insufficient liquidity, poor sharing, and difficulty for users to purchase; and one of the most effective assets on the blockchain is the asset exchange. Securitization can well complement the existing problems in the area of ​​special debt, and can also naturally guarantee rights and transfer issues, especially in the field of physical assets.

(Author's Note: Blockchain of financial assets, that is, tokenization of financial assets, that is, corresponding to basic assets, such as equity, debt, options, futures, etc., issue specific tokens one-to-one, using digital currency Or digital fiat currency for pricing, bookkeeping, trading, and settlement through the blockchain.)

With the fiery 2017 of Ethereum, utility tokens, security tokens, and public offerings of ICOs have been hyped up. Utility tokens are generally issued by project issuers in conjunction with their own business scenarios and the services and products they can provide for project funding. Generally speaking, such token issuance activities are somewhat similar to the pre-sale of products or services.

Securities tokens are usually supported by real assets, such as asset equity, limited liability company shares, commodities, bonds, physical assets, etc. Holders of securities tokens can obtain corporate ownership, shares, and operating income dividends. In 2018, asset tokenization and security tokens and the blockchain platform supporting this business have developed to a certain extent, and they have developed rapidly in the United States. In Asia, it is gradually being accepted by the market. For example, Chainstone Capital and Distributed Capital are beginning to pay attention, and they have begun to conduct in-depth research and betting on such startups.

The World Economic Forum predicts that in the next decade, 10% of the world's GDP will be stored in crypto assets, totaling $ 10 trillion. This is mainly due to partial ownership (partial ownership, which Hayek mentioned in the book "Currency Denationalization" can be used to share assets after evaluation, confirmation and other operations, allowing users to own a portion of an asset. Equity. For example, a house valued at 10 million yuan is tokenized, and a total of 10 million tokens are issued. If a person purchases 100,000 tokens, it is equivalent to owning 1% of the painting. (I.e. partial ownership)) and the release of liquidity premiums. Just as Yu'ebao can only become the largest currency fund by optimizing the purchase online and share issues, once the blockchain has helped our assets such as bonds to be tokenized, it has released liquidity and solved The issue of rights confirmation has solved the transparency in the bond field. I believe that more people will participate in the bond and other processes. And the natural traceability of the blockchain reduces the risk brought about by arbitrarily adding leverage.

Policies cooperate with blockchain to promote the development of local debt tokenization


The programmability of the smart contracts inherent in the blockchain allows products such as bonds and tokens to automatically realize transfer payments upon maturity, making it easier for investors to manage their assets and rights. Secondary market transactions can be easily tracked through cooperation with third-party exchanges, allowing investors to receive allocations and exercise other rights (such as voting) through the blockchain. The programmability of blockchain smart contracts is to improve the settlement speed of products such as bonds.

In terms of liquidity, the blockchain's innate token economic model plus technology can naturally achieve a share of 0.000000001, which releases sufficient liquidity, especially with the "CCP Central Committee on Persistence" "Data, Knowledge, Management, and Technology", which was first proposed in the Decision on Improving the Socialist System with Chinese Characteristics, Promoting the Modernization of the National Governance System and Governance Capacity, can be used as a production factor to participate in the distribution. We will see asset tokens After the transaction will come to us soon, especially the author recently participated in digital asset trading seminars in Xiong'an, Sanya, Haikou and other places, and learned that the government is organizing digital asset transactions based on blockchain Research and practical exploration.

Of course, the certification of bonds and other products as financial derivatives is not enough for technical support. It also requires compliance capabilities and institutional guarantees. Our policy-making department should formulate corresponding policies and regulations, so that everyone can have laws to comply with, and it must also have corresponding regulatory enforcement measures to match. At the same time, all participants can have relevant compliance / KYC / AML checks digital identities to ensure technology implementation and financial security.