The small-value Certificates of Deposit (CD) will trade on the Fusang Exchange in Labuan, Malaysia.

China Construction Bank (HK: 0939), a Big Four bank in China, and the second largest bank globally, has digitally issued bonds through its offshore branch in Labuan, Malaysia. The first tranche of the $3 billion debt issuance is worth $58 million. It will accept investments from both institutions and retail individuals. The minimum investment is only $100. (South China Morning Post)

The CDs yield about 0.75% at maturity in three months.

They will be issued at a discount and are digitally tradable in USD and bitcoin.

Digital securities

This is the first instance of the use of blockchain technology by a Chinese bank for the issue of securities.

“The issuance serves to narrow the divide between FinTech and the wider financial markets,” said Felix Feng Qi, Principal Officer of CCB Labuan.

“CCB Labuan will continue to work on expanding the technological boundaries to provide value added products and services to our customers, clients, and associates.”

The bank has tied up with the digital Fusang Exchange in Labuan for trading of the tokenized CDs. Trading will commence with effect from November 13.

Fusang Exchange

The Fusang Exchange is Asia’s first fully-licensed, fully regulated Stock Exchange focused solely on digital assets.

“We think this is the perfect showcase for how digital securities can power financial inclusion, by combining the exciting advancements in blockchain technology with the tokenisation of traditional securities,” said Henry Chong, CEO of Fusang Exchange. “We believe that this will be the start of Crypto 2.0. – the true institutionalisation of digital asset products.”

Investors can therefore convert their dollars into bitcoin to trade the China Construction Bank bonds on the Fusang Exchange.

However, the SCMP pointed out that as they are an offshore US dollar issuance by the CCB, the digital certificates are not covered by China’s deposit insurance.

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