Catastrophe bonds may join tokenization rush, with plans for test issuance in 2027
Financial firms Harneys and droppRWA are planning to issue the first blockchain-based catastrophe bonds by 2027. Unlike current tokenized assets that point to off-chain holdings, this structure aims to provide investors with direct legal title to the bonds on-chain.
Why it matters
This development could significantly increase the efficiency of the $65.6 billion catastrophe bond market by reducing settlement times from days to seconds.
Among them are catastrophe bonds, the specialized insurance products that pay out in the event of a major disaster, such as a hurricane or earthquake. That may be set to change, with plans to bring these onchain as well.
Harneys, a law firm whose specialties include advising on alternative risk-transfer products including cat bonds, and droppRW, a Bahamas-based platform that is helping Saudi Arabia tokenize its economy, plan to issue what they say will be the first catastrophe bonds whose ownership is recorded directly on a blockchain, with a first deal targeted for early 2027.
In many tokenization products, the token itself is a representation of a product that is secured in a traditional, offchain environment like a holding company. While ownership of the token can be transferred quickly, it points to that third party, not the asset. That's not the case for the planned cat bond project.
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