OCBC has become the first bank in Singapore to launch the sale of bespoke tokenized bonds to corporate accredited investors ( AIs ), which are corporations that have net assets exceeding S$10 million ( US$7.3 million ).

The tokenized bonds, which reference investment-grade bonds, are structured based on the client’s desired tenor and yield. They are then minted and transferred to the client’s wallet created on OCBC’s asset tokenization platform.

This is the second commercial use case using OCBC’s blockchain infrastructure which was developed in 2022. The first commercial use case was a partnership with the Land Transport Authority of Singapore ( LTA ) to pilot a blockchain-based conditional payment solution for construction projects in 2024.

The launch of the bond sale is in line with Singapore’s push to commercialize and scale the use of tokenized assets.

Corporate bonds usually have a high minimum transaction size of S$250,000, which could contribute to concentration risk. Tokenization addresses this as it enables fractional ownership – a corporate AI client can subscribe to tokens at S$1,000 denominations. This in turn facilitates the building of more diversified portfolios with a range of assets. Clients can similarly liquidate investments in S$1,000 denominations to meet cashflow requirements.

Other tokenized assets eyed

OCBC’s asset tokenization capability – which streamlines the entire lifecycle from creation and minting to ownership transfers and custody, and redemption through token burning – will be progressively extended beyond fixed income assets. The bank intends to tokenize a range of assets for its clients, including structured products and funds.

“As an industry, we have made significant strides in understanding and recognizing the vast potential of tokenized assets,” says Kenneth Lai, head of global markets at OCBC. “As we shift our focus towards commercialization, we are proud to have developed bespoke tokenized bonds via our asset tokenization platform.

“This innovation provides flexible and liquid investment alternatives, bringing tangible benefits to our customers. Leveraging our asset tokenization capabilities, we will progressively expand our offerings to include other types of tokenized assets,” Lai adds.

OCBC completed its inaugural transaction for a mid-sized manufacturing client in Singapore in November 2024, minting a tokenized bond with a tenor of less than a year. This met the needs of the client as they intended to pivot from fixed deposits and diversify their investment portfolio.

Other corporate AIs that favour fixed deposits in a high-interest rate environment may similarly view tokenized bonds as a viable alternative as interest rates fall.

The transaction was settled within the same business day from the debiting of the client’s bank account to the transfer of digital tokens from OCBC to the client’s wallet, which is custodized with OCBC. Traditional bond transactions usually take five days for settlement. This was the client’s first usage of tokenized assets.