City of Quincy Issues $10 Million Municipal Bond Using Blockchain Technology
The City of Quincy, located on the outskirts of Boston, Massachusetts, has made history by issuing a $10 million municipal bond using blockchain technology. This groundbreaking move was facilitated by JP Morgan, who acted as the sole underwriter for the tax-exempt seven-year bonds. The issuance utilized the Onyx private permissioned blockchain, marking a significant step forward in the adoption of distributed ledger technology (DLT) in the financial sector.
This is not the first time JP Morgan has leveraged blockchain for debt issuance. In 2018, the banking giant issued a Yankee certificate of deposit for the National Bank of Canada using the same technology. However, the Quincy issuance represents the formal launch of another innovative application for Onyx Digital Assets – the JP Morgan Digital Debt Service. This platform aims to streamline the issuance process, reduce costs, enhance liquidity, and shorten settlement times for municipal bonds.
Rick Coscia, Quincy’s strategic asset manager, expressed optimism about the potential benefits of blockchain technology for municipal bond issuance. He believes that over time, DLT could lead to lower issuance costs, increased liquidity, and faster settlement times, ultimately benefiting both issuers and investors.
The use of blockchain technology in municipal bond issuance has the potential to democratize access to these investment opportunities. By tokenizing bonds and automating the issuance process, smaller denominations become feasible, opening up the market to a wider pool of investors, including local residents. Quincy Mayor Thomas P. Koch expressed his excitement about the possibility of residents being able to invest in bonds that fund projects within their community, directly impacting their quality of life.
Blockchain advocates like Joseph Lubin, CEO of Consensys, see tokenized municipal bonds as a way to restore the community-driven spirit of the muni market. By making these securities more accessible and cost-effective, blockchain technology could revolutionize the way municipalities raise funds for public projects. While JP Morgan has not yet issued municipal bonds through its partnership with Consensys, other startups like Alphaledger have already begun using DLT for municipal bond issuance.
As the use of blockchain technology in the financial sector continues to evolve, the potential for greater transparency, efficiency, and inclusivity in municipal bond markets becomes increasingly apparent. The City of Quincy’s pioneering move to issue a municipal bond using blockchain sets a precedent for other municipalities and financial institutions to explore the benefits of DLT in debt issuance.
