The German state-owned KfW development bank is officially set to issue tokenized bonds, according to a press release issued Monday. The bank will partner with Boerse Stuttgart Digitial (BSD) to develop the bonds that will be based on blockchain technology.
The announcement coincides with the increasing interest in tokenization. The development marks a critical use case for blockchain technology. Moreover, it reinforces the exploration for traditional finance entities to explore how that technology can help optimize their operations.
Source: ThinkGeoEnergy
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German-Owned KfW Bank to Introduce Tokenized Bonds
In 2022, BlackRock CEO Larry Fink discussed the future of finance. Specifically, he said, “The next generation for the market, the next generation for securities, will be tokenization of securities.” This process of digitally representing a specified asset, and authenticating ownerships and transaction history is one that is coming to fruition.
Two years after that statement, more entities are embracing that reality. Among them is the German state-owned KfW, which is set to introduce tokenized bonds. The largest development bank in the country announced the bond offering in a recent press release.
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The bonds are a key part of European Central Bank trials. Indeed, the bank is seeking to utilize blockchain-based transactions for central bank money. Germany is set to explore this process in terms of its bond issuance infrastructure.
“As one of the world’s largest and most active bond issuers, we are actively driving digitalization initiatives in the issuing and settlement process,” KfW head of transaction management Gaetano Panno said. “The utilization of new technologies as part of the ECB trials enables us to technically process a ‘delivery vs. payment transaction and thus supports our digital learning journey.”
The project will seek compliance under the Terman Electronic Securities Act (eWpG). Moreover, BSD will oversee much of the process. Specifically, it will secure private keys and control wallets during the issuance and redemption phase of the process.