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- German state-owned bank, KfW, is taking an interest in the cryptocurrency industry as it prepares to issue a blockchain-based digital bond.
- The bank treasurer reveals that this move will bring increased efficiency and scalability as well as attracting more investors.
German state-owned bank, KfW, is poised to embrace the cryptocurrency industry, signifying a huge shift in the perception of the industry. According to a new report, KfW is preparing to launch a blockchain-based digital bond.
Per the German Electronic Securities Act, known as eWpG, the bank has already issued the first digital bond in the form of a central register security. Treasurer Tim Armbruster has revealed that the bank is taking a step forward to issue a blockchain-based bond to attract as many investors as possible.
“We believe that digitalization will be advantageous in terms of increased efficiency and scalability,” he added.
The new bond primarily targets institutional investors with the minimum size of the bond, which will be €100 million ($108 million) which is expected to have a maturity date in December 2025.
In a complex market, the bank reveals that it is scheduled to hold discussions with European institutional investors. The bank will help these investors familiarize themselves with the products and transactions. Significantly, Union Investment, which has experience with crypto securities, is set to be an anchor investor.
Four German financial institutions, DZ Bank, Deutsche Bank, LBBW, and Bankhaus Metzler, will manage the issuance of the bond (acting as joint bookrunners). Cashlink Technologies GmbH, a Frankfurt-based fintech company, will be responsible for tracking ownership of the digital securities on the blockchain (acting as the crypto securities registrar).
KfW clarifies that while the bond issuance will be digitized, the bank will continue processing payments through traditional payment systems. Experts speculate that the success of the bond could usher in more opportunities for the bank to digitize other operations.
KfW’s issuance of a digital bond echoes a recent move by JPMorgan into the cryptocurrency market. The American multinational finance company has recently moved to issue municipal bonds to investors using blockchain technology. This adoption signifies an increasing recognition of the potential of blockchain technology to revolutionize traditional financial systems.
As CNF highlighted, Germany has been at the forefront of crypto adoption in Europe. DWS, Deutsche Bank’s investment arm, has partnered with Galaxy Digital, a leader in digital assets and blockchain technology. This alliance has given rise to the introduction of two new Exchange Traded Commodities (ETCs) focused on Bitcoin and Ethereum.
Germany’s largest federal bank, Landesbank Baden-Württemberg (LBBW), has announced its intention to launch cryptocurrency custody services in collaboration with Bitpanda exchange. Furthermore, Deutsche Börse launched DBDX, a regulated exchange for institutional crypto trading. This marks their entry into the digital asset market and provides a secure platform for trading, settlement, and custody.
