The Tel Aviv Stock Exchange (TASE) and Israel’s Finance Ministry have successfully completed the proof of concept phase for a digital Israeli Bond traded on a dedicated blockchain platform, the TASE announced on Tuesday. The development positions Israel to release the world’s first digital government bond.
The collaboration between the TASE and the Finance Ministry’s Office of the Accountant General- called Project Eden- “marks a significant milestone in revolutionising the settlement and issuance processes in traditional capital markets,” the Exchange said in a statement. At an event attended by international and Israeli banks on 31 May, the Ministry of Finance issued and minted the first dummy digital governmental bond on a blockchain-based platform as an ERC-1155 Security Token. The blockchain used for this event was EVM-compatible, enabling potential integration with other blockchain solutions in the future.
Project Eden also introduced a digital Payment Token as a fundamental component of the settlement process. Utilising smart contracts and the ERC-20 token standard, the Payment Token represented one Israeli Shekel within the Eden ecosystem. During the live day event, the primary dealers securely transferred dummy funds through their digital accounts. The Eden system was constructed in this configuration to facilitate the settlement of security tokens against various digital currencies, potentially including central bank digital currencies (CBDCs). This aligns with ongoing projects led by central banks worldwide, as they explore the integration of CBDCs into traditional financial systems.
The TASE Bond Management smart contract acted as an intermediary between the issuer and the investors, ensuring the verification of valid and approved tokens, preventing inconsistencies or incomplete transfers, and guaranteeing the accurate transfer of tokens.