Today DekaBank said it issued a ‘crypto security’, a digital bearer bond, without the use of a central securities depository or other intermediaries. The bond was bought by Melzer Bank using central bank money, as part of the European Central Bank’s (ECB) wholesale DLT settlement trials. The Bundesbank’s trigger solution made it possible to execute a delivery versus payment transaction.
Germany’s electronic securities legislation, eWpG, supports the issuance of crypto securities without the usual intermediaries. However, it requires a BaFin regulated crypto registrar. When issuing a security on a blockchain, the crypto registrar provides a legal entity responsible for the registry entries. So they ensure there’s an up-to-date list of holders. In this case, that was also DekaBank which was recently the first bank to receive such a license.
DekaBank also founded the SWIAT institutional blockchain network where LBBW and Standard Chartered’s SC Ventures are co-investors. The bond was issued on the SWIAT network, which has now onboarded 24 institutions. SWIAT integrated its blockchain with the Bundesbank’s trigger solution to support the payment.
The Trigger solution is seen as a surrogate for a wholesale CBDC. The DLT hosting the digital assets (SWIAT) integrates with the Bundesbank’s Trigger chain, which then triggers settlement on the TARGET 2 payment system in central bank money.
We’ve asked for the bond details, but didn’t receive them in time for publication.
“Blockchain-based securities transactions can be carried out faster and more transparently than the classic settlement infrastructure,” said Silvio Lenk, Head of Treasury at DekaBank. “Payment transactions with digital central bank money are essential for this and close the previous gap. The ECB’s step to offer solutions here will enable further development of this market. For us, it is a must to participate in this.”
Last week the Deutsche Börse also revealed that DekaBank issued a €5 million bond using a DLT version of its D7 issuance platform. This was also as part of the ECB trials.