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Diverging Paths
April 2026
The tokenised bond market remains small, but the motives and methods of corporate and sovereign issuers are markedly different. Karl Loomes examines the two paths and what they mean for institutional investors
Image: rudi1976/stock.adobe.com
For several years the promise of digitised debt has been heralded as the next step in capital markets evolution. Yet, unlike the broad sweep of early electronic trading, the shift to tokenised bonds is moving in distinct directions, shaped by who is doing the issuing.
From industrial companies and development banks to sovereign treasuries and supranationals, the motivations behind these early deals diverge and the implications for investors vary accordingly.
At present, corporate entities have led in numbers, but sovereign and supranational issuers have almost matched them in scale. A recent dataset compiled by the Bank for International Settlements recorded 39 tokenised bonds by mid‑2025, comprising 24 corporate deals worth US$3.8 billion and 15 sovereign, supranational, or agency issues worth US$1.9 billion.
The volume is negligible compared with the wider bond market but significant enough to hint at a direction of travel. To understand where it might go, it helps to examine why different issuers have chosen the technology in the first place.
Motivation matters: Cost savings versus policy experiments
For most private issuers the appeal of tokenisation is operational. When Siemens issued a €300 million one‑year digital bond on the SWIAT platform in 2024 it was not trying to reinvent debt securities so much as to reduce the friction of settling them.
Working with the Bundesbank’s Trigger Solution, the bond settled within minutes in central‑bank money, eliminating the two‑day counterparty risk that caused friction in an earlier €60 million pilot on a public blockchain. Siemens’ treasurer hailed the process as a proof of concept for cheaper, faster issuance.
Banks and other financial institutions have followed a similar logic. KfW, the German development bank, first issued a €20 million digital bond via Deutsche Börse’s D7 platform. Italy’s Cassa Depositi e Prestiti went a step further, using the Bank of Italy’s TIPS‑Hash‑Link system to settle a €25 million tokenised bond on the day of issue.
These deals highlight a desire to compress settlement cycles, cut operational costs and showcase technological prowess. Private placements to professional investors also allow corporate treasurers to experiment without disrupting their wider funding programmes.
Sovereign issuers, by contrast, have used digital bonds as experiments in market infrastructure and monetary policy. Hong Kong’s government has built a three‑year programme of tokenised green bonds to test everything from DLT‑based investor registers to programmable money.
Its inaugural HK$800 million issue in February 2023 settled with a digital cash token on a private blockchain. A HK$6 billion multi‑currency bond in 2024 expanded the scope to Hong Kong dollars, renminbi, US dollars, and euros, and allowed subscription through Euroclear and Clearstream. By November 2025 the government scaled the programme to HK$10 billion and introduced settlement using tokenised e‑HKD and e‑CNY. Rather than cost savings alone, these deals were designed to probe how digital assets and wholesale central‑bank money might reshape capital markets.
Outside Hong Kong the experiments continue. The Republic of Slovenia issued a €30 million digital bond in July 2024 under the ECB’s wholesale‑CBDC trials, using the Banque de France’s DL3S tokenised cash platform. These projects are part of a broader agenda to future‑proof public debt markets and integrate them with central‑bank digital currency systems. The size of the deals is modest, but the policy questions are profound.
Settlement options: Tokenised cash versus triggers
A key distinction between the two strands of tokenised issuance lies in the assets used for settlement. Sovereign projects are the proving ground for tokenised central‑bank money. Hong Kong’s latest bond connected the issuance platform to e‑HKD and e‑CNY networks, while Slovenia’s bond used DL3S tokenised cash. In both cases the goal is to achieve atomic delivery‑versus‑payment (DvP) in central‑bank money, removing the credit risk inherent in commercial bank tokens and stablecoins. Such arrangements also provide central banks with a live environment to test wholesale CBDC infrastructures.
Corporate issuers, by contrast, have often relied on bridges between DLT platforms and existing payment systems. Siemens’ bond settlement used the Bundesbank’s Trigger Solution, which links the SWIAT ledger to the TARGET real‑time gross settlement system. Italy’s CDP bond used the Bank of Italy’s TIPS‑Hash‑Link to replicate a similar process.
Who can buy? Investor bases and distribution
The profile of investors also diverges. Corporate tokenised bonds are, for now, largely private placements. Siemens placed its bond with a small group of German asset managers. Societe Generale’s bond was sold to a single trading firm with a minimum subscription of US$5 million. KfW’s benchmark‑sized digital issues, while larger, are still targeted at professional investors. Such exclusivity reflects both regulatory caution and the need to control onboarding and wallet management.
Sovereign issues have tended to mirror traditional government‑bond distributions. Hong Kong’s 2024 bond allowed investors to subscribe via their existing accounts at Euroclear and Clearstream. Slovenia’s bond, issued under the ECB’s trial, also attracted a mix of domestic and international investors. These structures suggest that digital sovereign bonds may gain wider adoption sooner than corporate equivalents, provided settlement infrastructure scales.
Legal frameworks and the road ahead
Finally, the regulatory backdrop reveals different challenges. Sovereign issuers often require explicit legislative changes to recognise onchain records as the definitive register of ownership.
Hong Kong’s programme, for example, established in law that the DLT ledger constitutes the final record.
Corporate issuers operate within nascent regulatory sandboxes. Germany’s Electronic Securities Act, the EU’s DLT Pilot Regime and the UK’s Digital Securities Sandbox have enabled firms like Siemens and KfW to issue dematerialised bonds without altering their underlying funding programmes. Such regimes provide flexibility but also limit access to professional investors and impose bespoke reporting requirements. As frameworks mature and wholesale‑CBDC trials expand, these distinctions may narrow.
The nascent tokenised bond market is thus taking shape along two paths. Corporates are harnessing distributed ledgers to shave days off settlement cycles and reduce costs for small groups of investors. Sovereigns and supranationals are using tokenisation to test the plumbing of future financial systems and integrate their debt with new forms of central‑bank money. Both paths matter for institutional investors. Understanding the different motivations, settlement assets and regulatory frameworks will help firms navigate a market that is no longer just a proof of concept but a series of live experiments whose outcomes will shape the next generation of debt markets.
From industrial companies and development banks to sovereign treasuries and supranationals, the motivations behind these early deals diverge and the implications for investors vary accordingly.
At present, corporate entities have led in numbers, but sovereign and supranational issuers have almost matched them in scale. A recent dataset compiled by the Bank for International Settlements recorded 39 tokenised bonds by mid‑2025, comprising 24 corporate deals worth US$3.8 billion and 15 sovereign, supranational, or agency issues worth US$1.9 billion.
The volume is negligible compared with the wider bond market but significant enough to hint at a direction of travel. To understand where it might go, it helps to examine why different issuers have chosen the technology in the first place.
Motivation matters: Cost savings versus policy experiments
For most private issuers the appeal of tokenisation is operational. When Siemens issued a €300 million one‑year digital bond on the SWIAT platform in 2024 it was not trying to reinvent debt securities so much as to reduce the friction of settling them.
Working with the Bundesbank’s Trigger Solution, the bond settled within minutes in central‑bank money, eliminating the two‑day counterparty risk that caused friction in an earlier €60 million pilot on a public blockchain. Siemens’ treasurer hailed the process as a proof of concept for cheaper, faster issuance.
Banks and other financial institutions have followed a similar logic. KfW, the German development bank, first issued a €20 million digital bond via Deutsche Börse’s D7 platform. Italy’s Cassa Depositi e Prestiti went a step further, using the Bank of Italy’s TIPS‑Hash‑Link system to settle a €25 million tokenised bond on the day of issue.
These deals highlight a desire to compress settlement cycles, cut operational costs and showcase technological prowess. Private placements to professional investors also allow corporate treasurers to experiment without disrupting their wider funding programmes.
Sovereign issuers, by contrast, have used digital bonds as experiments in market infrastructure and monetary policy. Hong Kong’s government has built a three‑year programme of tokenised green bonds to test everything from DLT‑based investor registers to programmable money.
Its inaugural HK$800 million issue in February 2023 settled with a digital cash token on a private blockchain. A HK$6 billion multi‑currency bond in 2024 expanded the scope to Hong Kong dollars, renminbi, US dollars, and euros, and allowed subscription through Euroclear and Clearstream. By November 2025 the government scaled the programme to HK$10 billion and introduced settlement using tokenised e‑HKD and e‑CNY. Rather than cost savings alone, these deals were designed to probe how digital assets and wholesale central‑bank money might reshape capital markets.
Outside Hong Kong the experiments continue. The Republic of Slovenia issued a €30 million digital bond in July 2024 under the ECB’s wholesale‑CBDC trials, using the Banque de France’s DL3S tokenised cash platform. These projects are part of a broader agenda to future‑proof public debt markets and integrate them with central‑bank digital currency systems. The size of the deals is modest, but the policy questions are profound.
Settlement options: Tokenised cash versus triggers
A key distinction between the two strands of tokenised issuance lies in the assets used for settlement. Sovereign projects are the proving ground for tokenised central‑bank money. Hong Kong’s latest bond connected the issuance platform to e‑HKD and e‑CNY networks, while Slovenia’s bond used DL3S tokenised cash. In both cases the goal is to achieve atomic delivery‑versus‑payment (DvP) in central‑bank money, removing the credit risk inherent in commercial bank tokens and stablecoins. Such arrangements also provide central banks with a live environment to test wholesale CBDC infrastructures.
Corporate issuers, by contrast, have often relied on bridges between DLT platforms and existing payment systems. Siemens’ bond settlement used the Bundesbank’s Trigger Solution, which links the SWIAT ledger to the TARGET real‑time gross settlement system. Italy’s CDP bond used the Bank of Italy’s TIPS‑Hash‑Link to replicate a similar process.
Who can buy? Investor bases and distribution
The profile of investors also diverges. Corporate tokenised bonds are, for now, largely private placements. Siemens placed its bond with a small group of German asset managers. Societe Generale’s bond was sold to a single trading firm with a minimum subscription of US$5 million. KfW’s benchmark‑sized digital issues, while larger, are still targeted at professional investors. Such exclusivity reflects both regulatory caution and the need to control onboarding and wallet management.
Sovereign issues have tended to mirror traditional government‑bond distributions. Hong Kong’s 2024 bond allowed investors to subscribe via their existing accounts at Euroclear and Clearstream. Slovenia’s bond, issued under the ECB’s trial, also attracted a mix of domestic and international investors. These structures suggest that digital sovereign bonds may gain wider adoption sooner than corporate equivalents, provided settlement infrastructure scales.
Legal frameworks and the road ahead
Finally, the regulatory backdrop reveals different challenges. Sovereign issuers often require explicit legislative changes to recognise onchain records as the definitive register of ownership.
Hong Kong’s programme, for example, established in law that the DLT ledger constitutes the final record.
Corporate issuers operate within nascent regulatory sandboxes. Germany’s Electronic Securities Act, the EU’s DLT Pilot Regime and the UK’s Digital Securities Sandbox have enabled firms like Siemens and KfW to issue dematerialised bonds without altering their underlying funding programmes. Such regimes provide flexibility but also limit access to professional investors and impose bespoke reporting requirements. As frameworks mature and wholesale‑CBDC trials expand, these distinctions may narrow.
The nascent tokenised bond market is thus taking shape along two paths. Corporates are harnessing distributed ledgers to shave days off settlement cycles and reduce costs for small groups of investors. Sovereigns and supranationals are using tokenisation to test the plumbing of future financial systems and integrate their debt with new forms of central‑bank money. Both paths matter for institutional investors. Understanding the different motivations, settlement assets and regulatory frameworks will help firms navigate a market that is no longer just a proof of concept but a series of live experiments whose outcomes will shape the next generation of debt markets.
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