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China Construction Bank Pulls the Plug on $3B Blockchain Band

After an initial delay in its listing, the blockchain-based bond has been officially cancelled by the China Construction Bank (CCB). It was announced by FUSANG, a stock exchanged based on the blockchain in Malaysia, that the CCB had cancelled the bond formally. The CCB blockchain bond had generated a lot of excitement earlier this month, when the plan had first been reported. The Wall Street Journal had explained that the bond was planning to raise a sum of $3 billion. Worth $58 million, the first tranche had been expected to raise funds from both corporations and private individuals. Londbond Ltd was to be given the responsibility of issuing the bond. 

This is a special-purpose platform that was developed for issuing digital bonds and depositing the proceeds with CBB Labuan. These were to be sold for as low as $100 each, and for a tenor of three months. In addition, they were also intended to pan the annual Libor interest rate along with 50 basis points, which would make it around 0.75%. The purpose was to use the bonds in the same way on the blockchain as tokenized certificates of deposit. They were also planning to allow traders to purchase the bonds by exchanging their Bitcoin for the US dollar, as the bonds could be traded on the FUSANG exchange. 

At the time, the chief executive at FUSANG, Henry Chong had told the Wall Street Journal that the bonds would be monitored by the digital exchange in real-time. A boost in popularity would have prompted the exchange to launch similar products with a number of other currency denominations as well. Most of the excitement surrounding the bond was due to the organization that was issuing it i.e. the CCB. Referred to as one of the ‘Big Four’ Chinese banks, the Chinese Construction Bank is considered the second-largest bank in the world and its total asset haul amounts of $3.8 trillion.

However, it appears that things have hit a bit of a snag. A couple of days later, FUSANG had announced that there was a delay in listing due to the request of the CCB until further notice. According to data from Ether Scan, there were no transactions made through the smart contract address that had been associated with the sale, which indicated that there was a delay in the bond issuance and sale. FUSANG was quite vocal in claiming that the suspension hadn’t happened because of issues on its end. 

The filing said that FUSANG was quite disappointed at the suspension of the listing, but it wasn’t because of any operational, legal or technical issues with their platform or with the IPO process. The exchange had also been disappointed because there was significant demand for the bond. If it could have gone through, the bond could have been the harbinger for the future role of blockchain in the bond-issuance process. While the reason for the decision made by the bank is unclear, it appears to be due to the crypto connection. 

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