Germany’s state-owned KfW, ranked as the world’s safest bank based on global agency ratings, has invested in crypto securities. This is the German term for bearer securities issued on a blockchain without using a central securities depository (CSD). KfW invested €10 million ($11.4m) in the blockchain Pfandbrief (mortgage bond) issued last year by Berlin Hyp, a subsidiary of LBBW.
Berlin Hyp launched its €100 million ($114m) Pfandbrief during the European Central Bank wholesale DLT settlement trials. It is the first Pfandbrief issued as a crypto security under Germany’s Electronic Securities Act (eWpG). Berlin Hyp used the SWIAT blockchain, in which LBBW is an investor alongside founder DekaBank and others.
KfW said it was keen to buy in the secondary market, as liquidity is currently lacking. The bond was acquired via an over the counter (OTC) transaction with DekaBank acting as market maker and seller. The eWpG replaces the need for a CSD with cut down requirements for a crypto securities registrar, with DekaBank taking on that role. Rather than directly integrating with the blockchain, KfW simply used DekaBank as custodian and settled in the conventional manner.
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