JPMorganChase facilitated the first U.S. blockchain-based live municipal bond issuance for the City of Quincy, Massachusetts.

The inaugural transaction helped the City of Quincy, Massachusetts issue approximately $10 million in bonds. By leveraging a blockchain-based deposit account, the City was able to receive the proceeds of the new issuance in a delivery-versus-payment (DvP) settlement in near real-time and without the need for an Issuing & Paying Agent.

This bond sale marked the launch of the firm’s Digital Debt Service on Kinexys Digital Assets, J.P. Morgan’s private and permissioned blockchain-based platform. This is the first transaction in which blockchain technology has been leveraged to issue, settle, and record ownership interest in live municipal securities.

Journey to launch

Digital bonds that are issued, recorded and transferred using distributed ledger technologies (DLT) on blockchain represent a significant leap forward in the financial market ecosystem. The creation of the Digital Debt Service began with a complete deconstruction of the traditional end-to-end bond lifecycle. Through internal partnership across different business groups and engagement with some of the bank’s issuer and investor clients, JPMorganChase was able to create a client-centric blockchain solution that reimagines the way that bonds are issued, settled, and managed.

The Digital Debt Service offers issuers, investors, broker-dealers, custodians, and other market participants a comprehensive bond lifecycle management solution, using blockchain-based deposit accounts and smart contracts to facilitate post-execution trade management, DvP settlement of primary and secondary trades, and automated coupon payments and redemption events.

DLT advantages

The potential benefits of leveraging blockchain technology in the lifecycle of bonds include:

  • Reduced settlement risk through the simultaneous exchange of assets and cash
  • Decreased reliance on intermediaries and third parties
  • Enhanced transparency of transaction status via real-time visibility into a shared ledger
  • Potential for programmable settlement, including T+0 and precise settlement time specification

“The launch of the Digital Debt Service and subsequent pricing of the City of Quincy marked a huge collaborative and team effort from over 100 internal colleagues,” said Emma Lovett, Executive Director, Markets Distributed Ledger Technology  Credit Lead. “We are excited that this landmark new issuance will start to pave the way for evolving distributed ledger technology infrastructure within the fixed income markets.”