Tokenized green bonds
A green bond is a bond whose proceeds pay for environmental projects, such as solar parks or energy-efficient buildings. A tokenized green bond records the bond as a token on a distributed ledger, so issue, settlement and the register run there. The green label still comes from how the money is used and reported, not from the ledger. Dated events on the topic are in the calendar below.
Project Genesis in Hong Kong
The BIS Innovation Hub and the Hong Kong Monetary Authority built two prototype platforms for green bond tokenization with private sector groups in Project Genesis, and published three reports on November 4, 2021. The first prototype ran on a permissioned distributed ledger and simulated a bond's life cycle from origination and subscription to settlement and secondary trading. The second tested the same steps on a public permissionless blockchain, with simpler investor onboarding and direct payment and settlement between issuer and investor.
The BIS also describes where the project wanted to go: an investor downloads an app, invests any amount in government bonds and tracks in real time how much clean energy the financed projects generate. That stayed a vision; the published prototypes covered issue and settlement.
Issues in Europe
On June 20, 2023, the European Investment Bank issued a digital Climate Awareness Bond of 1 billion Swedish kronor as the first bond on so|bond, a blockchain platform developed by SEB and Crédit Agricole CIB, as SEB announced. The EIB lends the proceeds to climate projects.
In Germany, the solar developer Greenrock Energy issued GRE Bond two in February 2023, a tokenized green bond of 25 million euros under the Electronic Securities Act, approved by BaFin and recorded on Polygon, with technical support from Tokenforge in Berlin. pv magazine reported (in German) a minimum investment of 1,000 euros, a base interest rate of 7.5 percent plus a variable bonus, and a project pipeline of more than 420 megawatts that the money was to speed up. Investors were entered in a crypto securities register; the page on the crypto securities registrar explains that role.
The EU Green Bond Standard
The token form does not make a bond green under EU law. Regulation (EU) 2023/2631 on European Green Bonds applies from December 21, 2024. A bond that uses the European Green Bond label must allocate its proceeds in full according to the EU taxonomy, with up to 15 percent allowed for some activities without technical screening criteria, and the issuer must use external reviewers registered with and supervised by ESMA. These rules apply to a tokenized bond in the same way as to one held at a central securities depository.
Upcoming events on investment and digital assets in Germany
Finance Loop and tokenized green bonds
Finance Loop has pages on ESG investing and green fintech; tokenized bonds sit in its Investment & Digital Assets track. Finance Loop has a strategic cooperation with 21X, the Frankfurt venue that trades and settles tokenized securities.
Investment & Digital Assets
Risk & Compliance
What is a tokenized green bond?
A green bond, whose proceeds fund environmental projects, issued and held as a token on a distributed ledger. The bond terms and the use of proceeds are the same as for a conventional green bond.
What was Project Genesis?
A project of the BIS Innovation Hub and the Hong Kong Monetary Authority that built two prototype platforms for tokenized green bonds, one permissioned and one on a public blockchain. Its reports came out on November 4, 2021.
Is a tokenized green bond a European Green Bond?
Only if it meets Regulation (EU) 2023/2631, which applies from December 21, 2024: full allocation of proceeds to taxonomy-aligned uses, with limited exceptions, and an external review by a reviewer registered with ESMA.
Has a tokenized green bond been issued in Germany?
Yes. Greenrock Energy issued GRE Bond two in February 2023, 25 million euros under the Electronic Securities Act on Polygon, from 1,000 euros per investor.
Tokenized green bonds and Finance Loop
Finance Loop covers tokenized green bonds in its Investment & Digital Assets track, next to tokenized bonds, ESG investing and crypto securities registers. Finance Loop brings people from asset managers, banks, issuers and tokenization platforms together at events in Frankfurt, Munich, Berlin and Hamburg.
Finance Loop is a professional network and has the goal of driving the adoption of emerging technologies in finance, such as AI, digital payments, cloud and blockchain solutions. Finance Loop helps its members build skills and personal networks in these fields: Investment & Digital Assets, Payments & Digital Money, Digital Infrastructure & Sovereignty, and Risk & Compliance.