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China Construction Bank to Issue Offshore Bonds Tradable in Bitcoin

UTC by Steve Muchoki · 3 min read
China Construction Bank to Issue Offshore Bonds Tradable in Bitcoin
Photo: Shutterstock

China Construction Bank clarified that it doesn’t work with Bitcoin or any other cryptocurrency. However, it will accept bond deposits made in Bitcoin.

One of the world’s largest bank by market capitalization, China Construction Bank Corp (HKG: 939), has partnered with a Hong Kong-based fintech to issue blockchain-powered offshore bonds that are tradable in Bitcoin. According to the news outlet Cointelegraph, China Construction Bank plans to raise up to $3 billion in the project. Moreover, it has begun with a tranche of $58 million from both institutional and individual investors.

Apparently, the digital offshore bonds will be issued through the bank’s branch in Labuan, Malaysia, at a minimum of as little as $100 each. The megabank has set the digital bonds to have a tenor of up to three months. Notably, they will pay the annualized interest of Libor plus 50 basis points.

Offshore Bonds that Can Be Bought with Bitcoin

In adherence to different jurisdictions’ rules, the bank noted that tax residents from China, the United States, Iran and North Korea cannot purchase its digital bonds. This is because the bank’s branch in Labuan, Malaysia is viewed as a safe haven and will be contradicting some countries’ tax laws.

The megabank clarified that it is not dealing in Bitcoin or any other cryptocurrency in the market. However, it will accept bond deposits made in Bitcoin as per its core business structure.

This is “the first publicly listed debt security on a blockchain,” said Felix Feng Qi, the CEO of CCB’s offshore Malaysian business and principal officer of the CCB Labuan branch.

Market Perspective

Shares of China Construction Bank popped 3.17% on Wednesday to close the Hong Kong stock market trading at 6.19 Hong Kong dollars.

The megabank has a market capitalization of approximately HK$ 1.49 trillion. Having dropped approximately 8.02% year to date due to the coronavirus crisis, the shares have regained part of the loss in the past three months.

Notably, China Construction Bank shares received an average of Buy rating from 21 credible analysts. As China continues to implement policies to revamp the economy, some banks are warning that soured debts would later emerge at the end of the year and next year.

During the latest quarterly earnings, China Construction Bank reported a drop in profits due to coronavirus pressure. The company is adopting the latest technology to help it diversify its revenue collection in the future.

The combination of blockchain technology and the use of cryptocurrency in its internal platform will put it on top of global competition. This comes as more people and institutions adopt digital assets and the use of blockchain technology to access banking services.

It is yet another win for Bitcoin as it continues to aim for all-time high of around $20k. 

Bitcoin News, Bonds, Business News, Cryptocurrency News, Market News
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