Chinese bank wants to exchange $3 billion in digital securities for Bitcoin

  • 13. November 2020
  • Bitcoin

Starting today, you can trade digital securities with Bitcoin (BTC) at the China Construction Bank (CCB).

As soon as the model is up and running, other digital shares or bonds will be redeemable for Bitcoin.

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Bitcoin and bonds
CCB from Beijing is the second largest bank in the world. They work with fintech company Fusang to buy bonds issued on the blockchain. You could see it as a kind of STO, a security token offering.

A bond is a negotiable debt instrument for a loan taken out by a government, a company or an institution. This in itself is great news, but it does not stop there.

According to the South China Morning Post, the bank is offering $3 billion in digital bonds, which can be traded against dollars, but also against BTC. Apparently, the bank wants to accumulate assets in Bitcoin in this way.

As we know, this week the price went through the $16,000 limit. It has only been 12 days that the price has been above that level.

The Fusang Exchange is a digital exchange licensed by the financial regulator in Labuan, an area in Malaysia. Bond trading starts today.

Gap with traditional world
Felix Feng Qi, working for Fusang, says that this will „narrow the gap between fintech and the wider financial markets“.

The combination of Bitcoin, STOs and bonds is not common in traditional finance.

The digital bonds come in the form of certificates of deposit, also known as deposit certificates. These are tradable debt securities with a short maturity.

According to the providers, there are advantages to this way of investing, because, for example, fewer intermediaries are involved.

The fact that Bitcoin is part of the trading company is a positive development. But creating digital securities in exchange for bitcoin is a completely different business than buying BTC on a spot market and storing it for the long term.