Germany’s KfW to Sell Its First Blockchain-Based Digital Bond – BNN Bloomberg

(Bloomberg) — German state-owned development bank Kreditanstalt fuer Wiederaufbau is preparing to issue its first blockchain-based digital bond in the form of a crypto security. 

KfW has already issued a first digital bond in the form of a central register security in accordance with the German Electronic Securities Act, known as eWpG. “We are now taking the next big step with the issuance of a blockchain-based bond for which we want to attract as many investors as possible,” Treasurer Tim Armbruster said in a statement.

“We believe that digitalization will be advantageous in terms of increased efficiency and scalability,” he said.

A discussion is set to take place with European institutional investors during a preparatory phase of several weeks to give investors time to familiarize themselves with the transaction. Union Investment, which already has experience with crypto securities, is an anchor investor.

In this deal, KfW is limiting itself to the issuance of the bond in digital format; payments will continue to be processed in the traditional way using the established payment systems. The transaction is scheduled to be completed in the summer.

Read More: Nascent Digital Bond Market in Japan Sees Biggest Sale to Date

DZ Bank, Deutsche Bank, LBBW and Bankhaus Metzler will be joint bookrunners. Frankfurt-based fintech Cashlink Technologies GmbH will act as the crypto securities registrar.

The minimum size of the bond, which is expected to have a maturity date in December 2025, will be €100 million ($108 million), according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it.

JPMorgan Chase & Co. is using blockchain technology to bring municipal bonds to investors, a move that charts new territory in the securities market, Bloomberg reported last week.

©2024 Bloomberg L.P.