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- In 2024, KfW, a German development bank, will launch a tokenized bond, after issuing a €20 million digital bond.
- Clearstream’s D7 platform could catalogue its first crypto security with KfW’s tokenized bond, leveraging blockchain technology.
By 2024, German development bank KfW is expected to introduce an innovative tokenized bond. The bank has already set a milestone by issuing a €20 million digital bond via Deutsche Börse’s proprietary Clearstream platform using a centralized data storage system on its D7 platform.
The German regulation on digital securities, known as eWpG, supports both centralized digital repositories and decentralized ones operating on blockchain technology. Under this regulation, the latter are classified as cryptographic securities, a category into which KfW’s next issue will fall.
According to a report by International Financing Review, KfW broached the topic of its upcoming tokenized bond at a recent conference. Union Investment, a prominent German asset management firm, will again be a lead investor in this KfW tokenized bond. This firm has played a significant role in investing in tokenized bonds, from the initial European Investment Bank to Siemens and Metzler’s tokenized fund units. Tim Armbruster, KfW’s treasurer, emphasized that the main value of these initiatives lies in the learning gained.
Based on previous experiences with token issuance, it can be deduced that the first one always represents a big challenge, more for legal than technical issues. If KfW opts to use Clearstream’s D7 platform again for this issuance, it could be the first time that a product is classified as a crypto security on that platform, which to date has been used exclusively for digital issuances in a centralized system.
Additionally, Cashlink, a German startup specializing in the registration of cryptographic securities, recently published an analysis on the cost reduction of digital bonds. Cashlink, noted for its active involvement in bond issuance, collaborated on Metzler’s recent tokenization of funds.
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