On-Chain Bond Issuance: A Leap for Sustainable-Agriculture and DeFi or a Regulatory Minefield?

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The sustainable-agriculture industry is heading for new heights as a French company, Lamar Olive Oil, has successfully issued an on-chain bond using Obligate, a Switzerland-based decentralized finance (DeFi) platform. This groundbreaking event has made Lamar Olive Oil’s bond the first of its kind to be denominated in Membrane Finance’s EUROe. Membrane Finance claims that EUROe is the only EU-regulated crypto stablecoin in the market.

In collaboration with Credora, Obligate’s credit rating partner, the underwriting and structuring process, as well as credit evaluation and ongoing risk monitoring, were seamlessly carried out. The partnership between these two companies showcases the potential for innovation within the industry.

Obligate, built on the Polygon blockchain, aims at providing small and medium-sized enterprises with a secure and transparent method of issuing, tracking, and settling debt. The platform allows companies in developing and emerging markets to have greater access to funding due to the lowered thresholds for issuing bonds. In this case, smart contracts take up the role of the issuer and paying agent in the settlement layer, replacing traditional bond issuance practices.

While this development brings immense opportunities for the sustainable-agriculture industry and businesses seeking funding, some concerns around the adoption of blockchain technology still persist. One such concern is the scalability and performance of blockchain networks, such as Ethereum, which might struggle to maintain their efficiency in the face of increased user numbers and transaction activity.

Another topic of discussion regarding the use of blockchain for bond issuance is the regulatory landscape. As EUROe claims to be the only EU-regulated crypto stablecoin, it raises questions about the other stablecoins operating in the market and how they are being regulated. While Membrane Finance’s EUROe continues to pave the way for stablecoins in the EU, achieving widespread acceptance and ensuring regulatory compliance remains a challenge.

Moreover, the issue of security cannot be overlooked when discussing the use of blockchain technology. Recent incidents of hacks and security breaches in the DeFi space call for enhanced protective measures to ensure that sensitive financial data and transactions are safeguarded.

Despite the potential drawbacks, Lamar Olive Oil’s on-chain bond issuance marks a step forward for the sustainable-agriculture industry and the utilization of blockchain and DeFi technology in the financial

Source: Coindesk

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