Background

ICMA’s DLT Bonds Reference Guide supports the development of efficient and resilient cross-border capital markets by promoting consistent approaches to DLT-based debt securities. Developed by ICMA’s DLT Bonds Working Group, it brings together issuers, investors, banks, law firms, market infrastructures, central banks and technology providers. The guide aims to raise awareness, provide practical guidance and encourage collaboration, while avoiding fragmentation in emerging DLT bond markets.

Introduction

DLT and blockchain use in bond markets expanded during 2024, with notable transactions including a USD 750 million equivalent multi-currency issuance by Hong Kong SAR, a CHF 200 million seven-year World Bank bond, a EUR 300 million Siemens issuance under German law, and a USD 300 million Asian Infrastructure Investment Bank issuance under English law.
Market infrastructure also advanced, with Switzerland launching a wholesale CHF CBDC in December 2023. In 2024, the Eurosystem settled over 200 DLT-based transactions involving 64 institutions in central bank money, totalling EUR 1.59 billion. Despite this progress, DLT-based debt securities remain a small segment of global bond markets due to regulatory fragmentation, limited interoperability, uneven access to digital cash and constrained investor participation.

A collaborative effort across the global value chain

The guide reflects practical experience from stakeholders involved across issuance, trading, custody and servicing. It is designed for both traditional debt capital market teams and digital asset specialists. Drawing on real transactions, it highlights shared challenges and dependencies across the value chain, emphasising coordination between legal, technical and operational functions.

How to use the ICMA DLT bonds reference guide

The Reference Guide is a non-exhaustive, living document comprising more than 50 practical questions spanning the lifecycle of a DLT-based debt security. It is intended as a decision-support tool rather than prescriptive guidance. Users are encouraged to assess choices based on governing law, investor location, platform design, listing requirements and settlement arrangements, in consultation with legal and regulatory advisers.

Pre-issuance considerations

This section focuses on defining the legal nature of the debt security and the role of DLT, such as issuance, ownership transfer, lifecycle management, reporting and settlement efficiency. It highlights the importance of determining whether a DLT bond represents contractual rights or a distinct tokenised asset.
It also examines DLT platform design, including governance, permissioning, node distribution, smart contract standards, auditability, cybersecurity and resilience. The guide stresses the need for fallback and business continuity arrangements, including the ability to migrate to traditional issuance structures if DLT systems fail.

Marketing, disclosure and issuance

Key considerations include identifying eligible investor types, managing selling restrictions, and determining whether issuance is public or private. The guide highlights DLT-specific disclosure and risk factors, particularly relating to operational, legal and settlement risks.
Tax treatment, eligibility under existing contractual frameworks such as GMRA and GMSLA Digital Assets Annexes, and participation in regulatory sandboxes are also addressed. For green, social, sustainability and sustainability-linked bonds, the guide notes opportunities to use DLT to enhance transparency through on-chain allocation, impact reporting and KPI tracking.

Registration and safekeeping

This section explores custody and registration models under different legal regimes, including the role of central securities depositories, crypto securities registrars and account keepers. It emphasises clarity on definitive records, holder recognition and integration with traditional custody chains. Existing custody arrangements may require amendment to address DLT-specific risks such as forks, key management and asset recovery.

Trading and settlement

The guide assesses liquidity provision, listing options and trading models, including OTC and venue-based trading. Settlement considerations include delivery versus payment, settlement finality and interoperability between DLT platforms and traditional systems. Various cash settlement options are considered, including fiat, wholesale CBDCs, tokenised deposits and e-money tokens, with a focus on mitigating counterparty and operational risk.

Investor considerations

From an investor perspective, eligibility under UCITS or AIFMD, valuation approaches, ratings alignment, liquidity and custody models are critical. The guide highlights incremental risks linked to distributed infrastructures and the need for thorough due diligence involving internal and external stakeholders.

Asset servicing and lifecycle events

The guide reviews the use of DLT for interest payments, redemptions and other lifecycle events, noting that processes may be fully automated, partially automated or managed through traditional systems depending on structure and risk appetite.

Third-party engagement

Engagement with custodians, settlement systems, platform operators and listing authorities is necessary to ensure regulatory compliance, operational continuity and interoperability throughout the bond’s lifecycle.