ConsenSys Acquires US Broker-Dealer in Bid to Tokenize Trillion-Dollar ‘Muni’ Bond Market

ConsenSys has bought a U.S.-based broker-dealer in an try to overhaul the multi-trillion-dollar municipal bond market.

The ethereum-focused VC and expertise firm stated it had accomplished the acquisition of the Philadelphia-based Heritage Monetary Methods, Bloomberg reported Tuesday. The acquisition offers ConsenSys advisory and broker-dealer capabilities within the U.S., permitting it to supply newly tokenized municipal bonds by means of its ethereum-based working system, Codefi.

Native governments within the U.S. have issued municipal (“muni’) bonds to finance public initiatives because the starting of the 19th century. Price practically $four trillion in Q3 2018, buyers proceed to put billions of {dollars} yearly in municipal bonds. Internet flows smashed information in 2019 once they exceeded $90 billion, in response to a BlackRock report.

However though extremely common investments, muni bond trades often succumb to clerical errors; late repayments are frequent. As a result of authorities not often difficulty debt in denominations smaller than $5,000, the secondary marketplace for municipal bonds is comparatively small and inactive.

ConsenSys believes distributed ledgers can disrupt the muni market by automating repayments and monitor obligations and bond transfers on the secondary market, whereas a smart-contract layer might additionally substitute a lot of the authorized contract work that presently needs to be finished manually by banks.

Blockchain might additionally assist native governments difficulty municipal bonds in smaller denominations. Talking to Bloomberg, ConsenSys’ world fintech co-head, Patrick Berarducci, stated the expertise may encourage residents in the local people to buy debt, as an alternative of enormous monetary establishments.

Settlement phrases and ConsenSys’ buy value for the Heritage Monetary acquisition haven’t been disclosed. The acquisition is available in the identical week ConsenSys introduced a 14 % minimize in workers numbers as a way to refocus the corporate on its major infrastructure platforms, which embrace Infura, PegaSys, MetaMask and Codefi.