Israel to start live testing of blockchain-backed platform for digital bonds trading

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Key Takeaways

  • Israeli government partners with TASE, Fireblocks  VMWare to perform live testing of a blockchain-backed platform for digital bonds trading
  • The project called “Eden” is aimed at shortening the duration of issuance and clearing of government bonds, improving transparency, streamlining processes, and mitigating risks.

The Israeli Ministry of Finance has now come up with a project called “Eden” to prepare for the issuance of government bonds on a blockchain platform. The project is in collaboration with the Tel Aviv Stock Exchange (TASE), digital assets custody provider Fireblock and the United States software solutions developer VMware.

“The implementation of the advanced technologies will reduce costs, shorten the duration of issuance and clearing of government bonds, improve transparency, streamline processes and mitigate risks,” the official press statement reads.

Under this project, the Israeli Ministry will soon start testing a blockchain-backed platform for digital bond trading. Commenting on the latest development, Accountant General Yali Rothenberg said, “I believe that blockchain-based technologies are here to stay, and over time will permeate the core of the financial markets, thoroughly and deeply altering them. It is our duty to constantly examine new technologies and methodologies.” 

As per the official statement, the project will allow a first and important foothold that will serve as the foundation for upgrading other traditional mechanisms down the road. The about-to-be-kicked-off live test will see units of the digital bond issued to e-wallets of the acquiring participants, paid for in digital currency, which will then be transferred to the Israeli Ministry’s e-wallet. The pilot project is expected to be completed by Q1 2023.

The latest development also comes amid reports and survey results that point to the increasing number of crypto enthusiasts in Isreal. The country features one of the highest crypto-adoption rates worldwide, with recent Gemini polling reporting that 28% of Israelis owned crypto in 2022, 51% of whom were women, thereby making Israel a world leader in crypto gender equality.

Despite these numbers, Institutional adoption of crypto in Isreal remains a big hurdle owing to the country’s taxation laws. Israel was also recently ranked as the third worst country for crypto taxation.

Israel is, however, not the pioneer when it comes to the digitalizing Government bond. In 2018, the World Bank for Reconstruction and Development and the Commonwealth Bank of Australia raised over $100 Million for two-year blockchain bonds. Last year, the European Investment Bank launched a digital bond issuance on a blockchain platform.

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Saniya Raahath
Saniya Raahath

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