KfW's exploration of digital finance has taken a new turn as it becomes an investor in crypto securities, marking a significant shift in its approach. The institution has invested EUR 10 million in Berlin Hyp’s blockchain-based Pfandbrief for its liquidity portfolio. This digital mortgage Pfandbrief, initially issued in August 2024 on the basis of the German Electronic Securities Act, represents Germany's first of its kind, with a total volume of EUR 100 million and a maturity date set for July 2027.
The acquisition, facilitated by DekaBank on April 25, 2025, involved an over-the-counter transaction. "As an internationally very active capital market participant, we want to put a strong emphasis on digitalisation by highlighting innovation opportunities as an issuer and as an investor. We see clear long-term advantages in the use of DLT (Distributed Ledger Technology) in the financial market, as transactions are carried out faster and more efficiently", said Tim Armbruster, Treasurer at KfW Group, expressing enthusiasm about the potential efficiencies brought by distributed ledger technology.
KfW aims to implement the German Electronic Securities Act practically and hopes to influence other capital market participants to embrace digitalisation in capital market business. The bank explored various technical options for purchasing crypto securities, noting that investors can participate in crypto security transactions without complex technical infrastructures or blockchain access.
DekaBank played a crucial role as market maker, custodian, and registrar, transferring the bonds from its account onto the blockchain and making entries in KfW’s custody account via traditional systems. Thorben Lüthge, Head of Markets at DekaBank, emphasized blockchain's transformative potential: “Blockchain has the potential to significantly transform the capital market — from enhancing infrastructure efficiency to enabling new products and generating potential demand for them.”
KfW has consciously chosen to invest in the secondary market to boost liquidity for DLT-based securities, emphasizing that consistent demand and supply are vital for the segment's growth. The development of liquidity, settlement of DLT-based transactions in central bank money, and eligibility of DLT-based securities with central banks remain crucial for scaling this new market.
SWIAT GmbH, a fintech company based in Frankfurt am Main, contributed to the development of the infrastructure underpinning the blockchain Pfandbrief. As a leader in the blockchain ecosystem, SWIAT has completed over EUR 600 million in securities transactions by the end of 2024 and features shareholders including DekaBank, LBBW, Standard Chartered, and Comyno.
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