The city of Lugano in Switzerland has made history by issuing its third bond using blockchain technology. This latest bond is valued at $139 million and is listed on both the digital exchange and the traditional exchange.
According to a recent report on government fintech, Lugano has issued a total of three digital bonds in the past two years, amounting to 320 million CHF ($365 million). These digital bonds are built on distributed ledger technology and are listed on both the SIX Digital Exchange and the SIX Swiss Exchange, the main stock exchange in Switzerland.
The most recent blockchain bond from Lugano, announced on November 4th, is valued at 120 million CHF. It is part of the Swiss central bank’s wholesale central bank digital currency pilot program, Project Helvetia, with settlement scheduled for November 25th through CBDC wholesale.
Lugano’s journey into blockchain bonds began in January 2023 with the issuance of a “digital native” bond valued at 100 million CHF with a six-year tenor.
The city’s second blockchain bond, issued in February 2024 in collaboration with Zürcher Kantonalbank and Basler Kantonalbank, is also worth 100 million CHF with a ten-year tenor and a 1.415% coupon.
You might also like: Swiss city Lugano to accept BTC for taxes, grant $50m to crypto startups
Paolo Bortolin, Lugano’s deputy chief financial officer, expressed his surprise at the reluctance of other issuers to embrace digital bonds through blockchain technology. He found the process to be seamless and not significantly different from issuing traditional bonds.
“After our initial issuance, we recognized the potential of this technology in shaping the future of finance, and we are committed to further digital bond issuances on SDX,” said Bortolin.
He emphasized the low utilization of blockchain technology in the public sector and hopes that Lugano’s efforts will encourage wider adoption of digital bonds.
“Our recent issuance has shown that investors are eager to invest in digital bonds, with full subscription in under an hour. I urge other issuers to join us in embracing the digital future of finance,” Bortolin added.
Aside from Lugano, other entities like the city of St. Gallen, Union Bank of Switzerland, and the World Bank have also issued bonds on SDX.
Lugano has gained recognition for its progressive approach to cryptocurrency adoption and its goal of becoming a Bitcoin and blockchain innovation hub in the financial sector.
In December 2023, Lugano made headlines by accepting Bitcoin (BTC) for tax payments and introducing a Bitcoin-pegged stablecoin named LUGA for transactions at over 350 merchants across the city.
You might also like: Swiss bank UBS tests blockchain for cross-border payments with digital cash
