Blockchain Ethics

Please help me understand this!

I’m trying to wrap my head around this one:

This is the main text:

"Banco Santander today announced that it has issued the first end-to-end blockchain bond. The bank issued the bond directly onto the blockchain and the bond will also continue to exist only on the blockchain: a first step towards a potential secondary market for mainstream security tokens in the future.

Banco Santander is itself the issuer of the $20 million bond, while one of the Group’s units purchased the bond at market price. The bond carries a quarterly coupon of 1,98%. Santander Securities Services is acting as tokenization agent and custodian of the cryptographic keys. Santander Corporate and Investment Banking (CIB), the bank’s global division that supports corporate and institutional clients, acted as dealer for the issuance, continuing the work which started in Santander’s blockchain lab in 2016.

Santander used the public Ethereum blockchain, one of the more advanced open source blockchain technologies. This allows Santander to achieve the milestone of tokenizing the bond securely and registering it in a permissioned manner on the blockchain. The cash used to complete the investment (on-chain delivery-versus-payment) and the quarterly coupons have also been tokenised, i.e., represented digitally on the blockchain. Thanks to this automation, the one-year maturity bond has reduced the number of intermediaries required in the process, making the transaction faster, more efficient and simpler. The goal for Santander CIB is to engage with our most innovative clients as we move from the project stage to product development."

My main question is this: Do you think transactions are happening entirely within Santander, or are they selling tokens to “real” customers? And generally speaking, is the idea to use tokens to render more liquid an illiquid security (the bond)?

I don’t think so, sounds like the transactions are occurring thought Santander Securities Services. Seems to me you should be able to think about this as SSS buying a large bond from Banco Santander and then selling shares of it on the blockchain (rather than an exchange). You can probably also think of it as a bond backed cryptocurrency, but that seems less accurate to me.