German promotional bank KfW is gearing up to issue its inaugural blockchain-based digital bond, complying with the German Electronic Securities Act (eWpG). The transaction is scheduled to be completed in the summer.
Having ventured into digitalisation with money market and derivatives activities since 2022, the bank announces in a press release that it is now advancing further with this blockchain-based bond issuance.
The transaction will be facilitated by a consortium of bookrunners including DZ Bank, Deutsche Bank, LBBW, and Bankhaus Metzler. DZ Bank will also serve as a collective registered holder of the bond. Cashlink Technologies, a Frankfurt-based fintech company, will act as the registrar for the crypto securities involved in the transaction.
Knowledge exchange
To ensure investor engagement and understanding, KfW will engage in a knowledge exchange with European institutional investors during a preparatory phase of several weeks. This is “to give the investors sufficient time to familiarise themselves in detail with this type of transaction”. Union Investment has already pledged support as an anchor investor, bringing experience with crypto securities to the table.
While KfW will issue the bond in a digital format, payments will continue to be processed through the bank’s traditional payment systems.