Tel Aviv Stock Exchange Can Tokenize Fiat and Bonds
The Tel Aviv Stock Exchange has achieved a significant milestone in its integration of blockchain technology by minting the first digital government bond as an ERC-1155 security token.
This development is part of Project Eden, a collaboration between the Israeli Ministry of Finance and the stock exchange aimed at exploring blockchain infrastructure for issuing and settling government bonds. The proof-of-concept phase also involved tokenizing the Israeli shekel, the country's fiat currency, to facilitate digital transactions. The settlement process utilizes a smart contract for bond management to ensure secure and consistent transactions.
The initiative's launch event witnessed the participation of both local and international banks, underscoring the potential for digital transformation in capital markets. Ittai Ben Zeev, the CEO of the Tel Aviv Stock Exchange, expressed the belief that Israel can take a leadership role in revolutionizing capital market information through innovation and digitalization.
The proof-of-concept (PoC) phase of the Tel Aviv Stock Exchange's blockchain integration involved the use of an Ethereum Virtual Machine (EVM)-compatible blockchain, which allows for future integration with other blockchain solutions. Blockfold and Fireblocks, two crypto firms, provided the distributed ledger infrastructure for interaction across wallets and token standards, facilitating the issuance and trading of treasury bonds.
The dummy bond was minted using Ethereum's ERC-1155 standard, which allows a single deployed contract to represent and control both fungible and nonfungible tokens in any quantity. Similar blockchain-based settlement systems are also being developed by the Bank of England and the Bank for International Settlements, with the goal of enabling settlements using distributed ledger technology for central bank digital currencies (CBDCs).
In Israel, the central bank is evaluating the adoption of stablecoins and considering the issuance of a CBDC to ensure that private companies do not dominate the country's digital payments system in the future.
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