German bank KfW is set to issue its first blockchain-based digital bond as a crypto security, in compliance with the German Electronic Securities Act (eWpG).
The transaction will be managed by a consortium of bookrunners, including DZ Bank, Deutsche Bank, LBBW, and Bankhaus Metzler, with Union Investments participating as an anchor investor. Additional investors will be integrated over the coming weeks, with the transaction anticipated to finalize in summer 2024.
KfW has previously issued a digital bond using central register security. Tim Armbruster, treasurer at KfW, stated, “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. The initial goal on the road to the digitalization of refinancing is to learn and identify potential for improvement. We believe that digitalization will enhance efficiency and scalability.”
Fintech firm Cashlink Technologies GmbH, based in Frankfurt, will serve as the registrar for the crypto securities.
In this initiative, KfW is focusing solely on the issuance of the bond in a digital format, while traditional payment systems will continue to be used for processing transactions.