More issuances of tokenized securities likely amid demand for digital assets

IMPROVING APPETITE for digital assets may result in more issuances of debt instruments using the blockchain like the tokenized bonds offered by the government last year, the top official of a cryptocurrency exchange said.

PDAX Founder and Chief Executive Officer Nichel Merlimichael O. Gaba told reporters at the sidelines of an event on Tuesday that following the strong appetite seen by the Bureau of the Treasury (BTr) for its maiden tokenized bond issue last year, another offering could be possible.

“There was a lot of demand [for the first offer]. I wouldn’t be surprised if they issued another one this year, but we’ll only know if they make a public announcement,” Mr. Gaba said, noting this would depend on the government’s funding requirements.

The BTr raised P15 billion from its maiden issuance of tokenized bonds last year as demand reached P31.426 billion, more than three times the target issue size of P10 billion.

The one-year notes fetched a coupon rate of 6.5%.

The fixed-rate government securities, which pay a semi-annual coupon, were issued in the form of digital tokens to be maintained in the BTr’s Distributed Ledger Technology Registry.

PDAX last year partnered with the BTr, the Land Bank of the Philippines, and the Development Bank of the Philippines to facilitate the issuance of the tokenized bonds and offer them to retail investors.

Mr. Gaba said other types of publicly- or privately-issued securities could be put on the blockchain in the future to expand access for retail investors.

“We’ve always been big believers that blockchain technology can enable access to what was previously inaccessible. To buy a T-bill (Treasury bill), you probably have to shell out hundreds of thousands or billions — and that is something that blockchain technology is perfectly designed to solve,” he said.

“We’re not exactly sure when that will happen, but putting the Treasury bonds on the blockchain and making it available to Filipinos for as little as P500 is a phenomenal start, and we can expect tokenized securities to be life-changing for most Filipinos,” he added.

Mr. Gaba said increased adoption of cryptocurrency in the country will be supported by developments in digital asset regulation.

He noted that PDAX saw an influx in users and surge of trading activity since Bitcoin began gaining, with trading multiplied by four times in the last three months. — A.M.C. Sy