Capital markets News

Deka Investment issues tokenized fund shares on SWIAT blockchain

swiat deka fund tokenization

Today SWIAT announced that Deka Investment, one of Germany’s largest fund providers, issued tokenized fund shares on SWIAT’s decentralized financial market infrastructure (dFMI). DekaBank founded SWIAT with other backers including LBBW and Standard Chartered’s SC Ventures.

Germany’s regulations support two types of digitalized securities – those registered in a centralized depository versus ‘crypto’ securities issued on a decentralized network. Hence, these are called ‘crypto’ fund shares, although they are not cryptocurrencies.

Deka Investment issued tokenized shares in its A-Deka-BlockchainEINS fund. It also plans to trial redemption when the time comes. Depending on how this goes, SWIAT could be used to tokenize a mutual fund soon.

One of the benefits of tokenization is the long term cost savings with fewer intermediaries involved. For this issuance, DekaBank is the depository and custodian for the offering.

Previously SWIAT was used to issue digital bearer bonds and digital registered bonds. Several German savings banks have been using the latter since May 2023.

Now SWIAT hopes to see several other institutions join its network this year for real time settlement and collateral management. It plans to participate in the European Central Bank’s experiments for DLT settlement, referred to as “New Technologies for Wholesale Settlement”. In addition to wholesale CBDC the trials will also involve a trigger solution offered by the German Bundesbank. Hence it will enable real-time delivery versus payment transactions.

“In 2024, we will connect further partners and solutions to our ecosystem and thus take another major step towards our strategic goal of establishing an international settlement standard for the issuance of digital assets across all asset classes together with global financial institutions,” said Dr Timo Reinschmidt, Co-CEO and CCO of SWIAT.

Asset managers & tokenization

The asset management sector is starting to embrace fund tokenization. JP Morgan and Bain & Co recently outlined a $400 billion opportunity in alternative funds. This year, two unveilings of fund tokenization solutions have been from subsidiaries of Standard Chartered’s SC Ventures and Nomura’s Laser Digital.

Update: clarified that the mention of a mutual fund relates to SWIAT not Deka Investment.

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