Recently, the Israeli government published a paper with the results of its bond tokenization experiment. This allowed them to demonstrate the advantages of blockchain technology for bond issuing. Project Eden, known as the initiative, was launched by the Ministry of Finance in May 2023 and involved TASE, JP Morgan, and BNP Paribas. Its purpose was to replicate the issue of government bonds on the blockchain.
Tokenization, smart contracts, and blockchain integration showed increased operational effectiveness. It also showed risk reduction, and transparency in the issuing, settling, and clearing processes. Tokenizing bonds on VMware into ERC1155 tokens and managing custody using FireBlocks facilitated smooth atomic transfers upon money receipt.
This process ensured transparent, real-time transaction recording, and simplified bond-related procedures through the TASE Bond Management Contract. Benefits included atomic settlements as well as improved security, risk minimization, and operational efficiency.
Future pilots aim to expand the scope, including other financial instruments and markets. This will allow them to explore diverse asset classes’ tokenization, and public networks’ expansion, and achieve interoperability. Additionally, Israel explores central bank digital currency (CBDC) concepts, proposing an interest-bearing digital shekel.
