Law firm Harneys and the droppRWA platform are gearing up to test the issuance of tokenized catastrophe bonds (cat bonds). The plan is to lock in ownership rights for these securities directly on the blockchain. Company reps have outlined their roadmap and given a rough launch timeline.

What Harneys and droppRWA Are Planning

The partners want to run a pilot for cat bonds in a tokenized format, where ownership is tracked on a distributed ledger. Their first transaction involving these tokenized assets is penciled in for early 2027.

How Catastrophe Bonds Work

Catastrophe bonds are used by insurance companies and government agencies to transfer some of the financial risk from natural disasters over to investors. Holders of these bonds pocket returns as long as a specified disaster—like a hurricane or earthquake—doesn’t happen. If the trigger event hits, funds are used to cover losses, and investors can lose part or all of their principal. That’s all baked into the bond’s terms from the jump.

Market Size

The cat bond market is valued at around $65.6 billion. Demand for these instruments stays strong thanks to the need for market-driven ways to spread the risk of major natural disasters.