Tel Aviv Stock Exchange completes proof-of-concept to tokenize fiat and bonds

The Tel Aviv Stock Exchange has completed a new phase in the integration of blockchain technology and traditional assets by minting the first dummy digital government bond as an ERC-1155 security token.

The proof-of-concept (PoC) phase of Project Eden, a collaborative effort between the Israeli Ministry of Finance and the stock exchange to investigate the use of blockchain technology in the issuance and settlement of government bonds, includes the Bond Mint.

Included in the proof of concept was the tokenization of the Israeli shekel, the nation’s official currency, which will act as a digital payment token to facilitate transactions. A smart contract for bond management is employed in the settlement process, working as a mediator to guarantee that the transactions are authenticated and have no discrepancies.

At the launch event of the initiative, a number of local and international banks were present, such as Barclays, BNP Paribas, Deutsche Bank, First International Bank, Goldman Sachs, JPMorgan Chase, Merrill Lynch, Bank Hapoalim, Bank Discount, Bank Leumi and Bank Mizrahi, as stated in a blog post dated June 6.

“We are of the opinion that the Startup Nation can take the lead in the digitalization of the capital markets. […] We are confident that the capital market data will be quite different in a few years, and it is up to us to spearhead the transformation,” said Ittai Ben Zeev, CEO of the Tel Aviv Stock Exchange.

The PoC was constructed on a blockchain that is compatible with the Ethereum Virtual Machine (EVM), thus allowing for future integration with other blockchain solutions. Blockfold and Fireblocks, two crypto firms, are the ones responsible for the distributed ledger infrastructure, making it possible for wallets and token standards to interact for the issuance and trading of treasury bonds, as per a statement from a Fireblocks spokesperson to Cointelegraph.

By utilizing Ethereum’s ERC-1155 — the standard interface for the dummy bond created — one deployed contract can manage and govern a mix of fungible and nonfungible tokens of any quantity.

Blockchain-based settlement systems are also being developed by the Bank of England and the Bank for International Settlements. Recently, the two institutions concluded a joint trial that managed to purchase properties in Wales and England utilizing distributed ledger technology. The endeavor’s goal is to construct a settlement system for central bank digital currencies (CBDCs).

In Israel, the central bank is examining the usage of stablecoins and is contemplating issuing a Central Bank Digital Currency (CBDC) to stop private enterprises from controlling the nation’s digital payments system in the near future.

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