Deutsche Börse, one of Europe’s largest stock exchange groups, plans to launch a regulated cryptocurrency exchange in 2024.
Additionally, it plans to deploy stablecoins. That’s not particularly unusual in the institutional space. For example, to settle digital securities on Switzerland’s SIX Digital Exchange, SDX uses tokenized Swiss Francs backed by deposits a the central bank.
The planned multilateral trading facility is part of Deutsche Börse’s ambition to cover the full value chain of digital assets, said Thomas Book who heads up trading and clearing. We assume the exchange will be institutionally focused, but didn’t receive confirmation in time for publication. The group is already the majority shareholder in Crypto Finance, the trading and brokerage firm it acquired in 2021 for CHF 100 million.
Smaller competitor Börse Stuttgart also has a crypto exchange, BSDEX, a joint venture with Japan’s SBI, Axel Springer and others. However, that is retail focused, although it offers institutional custody.
Across the Atlantic, several traditional finance players, including Citadel Securities, Fidelity and Schwab, have formed institutionally focused EDX Markets, a crypto exchange accessed via broker-dealers similar to conventional exchanges.
Deutsche Börse progress with D7 digital securities
Beyond crypto, Deutsche Börse is active in tokenized securities, funds and alternative assets.
Its D7 digital securities registry is based on DLT, although the platform is currently centralized. So far there have been 4,000 digital securities issued on the platform worth more than €3 billion. Three quarters of that was issued during the last month since it launched an API allowing greater automation. Partners using the solution for issuance include Commerzbank, DekaBank, KFV, LBBW and Vontobel.
To date D7 has focused on the German fixed income market but plans to expand to Luxembourg and hence internationally in Q2 2024. It will also explore expanding the asset classes beyond fixed income to ETFs. While it intends to have a decentralized custody version, that doesn’t yet have a specific launch date.
Deutsche Börse’s Stephan Leithner noted the recent rapid expansion related to retail structured products. These are popular in Germany but also big in France and the Benelux. He believes the considerable cost savings from the automation of digital issuances and instant settlement shows a good market fit.
Other Deutsche Börse digital asset activities
One of the current drivers of tokenization is interest from asset managers. In August Deutsche Börse acquired fundsDLT, the Luxembourg based fund distribution platform and has integrated it with D7.
Beyond digital securities, Deutsche Börse invested in the tokenized asset platform 360X alongside Commerzbank. Its target markets are art, music and real estate.
One of Deutsche Börse’s earliest DLT experiences was with HQLAᵡ, the collateral management platform used by JP Morgan, Goldman Sachs, ING, UBS and many of the world’s biggest banks. Deutsche Börse was the first big name investor and operates a crucial part of the infrastructure as a trusted third party enabling tokenization.