German state-owned bank Kreditanstalt für Wiederaufbau (KfW) has announced its plans to launch blockchain-backed digital bonds, marking a significant step towards the adoption of blockchain technology in traditional financial institutions in Germany. The upcoming digital bond will be issued in accordance with the German Electronic Securities Act (eWpG) and will leverage blockchain technology to securely record the bond’s details and ownership on a digital ledger. The bond is expected to be completed in the summer of 2024, with payments processed through conventional payment systems. Union Investment has been secured as a key anchor investor, and a consortium of bookrunners, including DZ Bank, Deutsche Bank, LBBW, and Bankhaus Metzler, will facilitate the transactions. Cashlink Technologies will serve as the crypto securities registrar. KfW Treasurer Tim Armbruster believes that the blockchain bond will drive adoption and attract investors, providing increased efficiency and scalability. It is worth noting that the KfW digital bond will not be available in the United States. This move by KfW follows similar initiatives by Societe Generale and HSBC, who have previously issued blockchain-based bonds. Furthermore, the City of Quincy in Massachusetts recently issued a $10 million municipal bond using JP Morgan’s Onyx private blockchain, highlighting the growing trend of migrating financial assets to the blockchain for improved transparency, reduced costs, and public accessibility.
