Germany’s Kreditanstalt fuer Wiederaufbau (KfW), the country’s third-largest state-owned bank, is poised to take a significant step forward in blockchain adoption with its inaugural issuance of a blockchain-based digital bond, labeled as a ‘crypto security.’
Scheduled for completion in the summer of 2024, the bond issuance will be conducted in accordance with the German Electronic Securities Act (eWpG), marking a milestone in the evolution of the European financial market.
With Cashlink Technologies GmbH serving as the crypto securities registrar, KfW aims to showcase the potential of digitalization, increase awareness of crypto securities, and contribute to the development of the digital securities market in Germany and Europe.
The issuance will involve a consortium of bookrunners, including DZ Bank, Deutsche Bank, LBBW, and Bankhaus Metzler, with DZ Bank also acting as the collective registered holder of the bond. This strategic collaboration leverages the expertise of institutions experienced in blockchain technology to ensure the success of the groundbreaking venture.
Melanie Kehr, Member of the Executive Board of KfW Group, underscores the importance of this initiative in testing financial market innovations and setting a precedent for future transactions. By embracing blockchain technology, KfW aims to enhance efficiency and scalability in capital market processes.
To engage European institutional investors, KfW will conduct extensive dialogues to familiarize them with this innovative transaction. Union Investment has already committed as an anchor investor, highlighting the growing interest in crypto securities among established financial players.
While embracing digitalization, KfW remains committed to ensuring a smooth transition by processing funds through traditional payment systems. This approach minimizes disruptions while reaping the benefits of blockchain-based automation.
KfW’s foray into blockchain-based bonds builds on its previous experiences with digitalization, marking the next phase of its transformation journey. Tim Armbruster, Treasurer at KfW, emphasizes the potential advantages of digitalization, foreseeing increased efficiency and scalability.
