KfW tapped Boerse Stuttgart Digital as its technical infrastructure provider for the issuance of its tokenized bonds.
The state-owned bank plans to roll out the blockchain-based securities “in the coming weeks.”
Boerse Stuttgart Digital’s digital ledger technology is connected to Bundesbank’s Trigger Solution.
Boerse Stuttgart Digital, the crypto and digital asset division of the Boerse Stuttgart Group, announced this week the upcoming launch of a new solution for tokenized securities. The organization tailored its latest infrastructure for the blockchain-based digital bond issuance of Germany’s state-owned development bank, KfW.
The new milestone comes just two months after the Boerse Stuttgart Group successfully gained approval to continue its stock exchange operations in Europe under the second phase of the European Central Bank’s (ECB) EU-wide tests for the settlement of blockchain-based transactions against central bank currency.
KfW’s New Tokenized Securities
Under their collaborative efforts, Boerse Stuttgart Digital will provide the technical infrastructure for KfW’s tokenized securities. It will also manage and secure the wallet and private keys throughout the issuance and redemption of KfW’s digital bonds.
The venture operates in accordance with the provisions of the German Electronics Securities Act (eWpG). The parties aim to launch the tokenized bonds “in the coming weeks.”
According to Boerse Stuttgart Digital, the collaboration reinforces its position as a trusted partner in the digital asset sector of European financial institutions. Its coverage includes banks, brokers, and asset managers.
Boerse Stuttgart Digital Managing Director Ulli Spankowski stated in a press release that they aim to be a key transformative force in the digital European market infrastructure. KfW Head of Transaction Management Gaetano Panno added that their latest progress exemplifies how they are driving digitalization initiatives in bond issuance and settlement processes under the ECB’s experimental regime for tokenized assets.
ECB’s DLT Trials
Boerse Stuttgart Digital linked its digital ledger technology (DLT) infrastructure with Bundesbank’s Trigger Solution. The ECB trials also include Germany’s four largest banks: Deutsche Bank, Commerzbank, DZ Bank, and LBBW. Others include Bankhaus Metzler and V-Bank.
The banks serve as the trial’s trading and settlement partners. The institutions are connected directly to the blockchain network.
The ECB trial mainly centers on testing the atomic settlement of securities via a “delivery versus payment” (DVP) approach. The securities settlement process requires the immediate posting of the payment before or at the time of the delivery of securities.
The process significantly mitigates the risk of non-payment upon the delivery of the securities. At the same time, it avoids making payments without the delivery of securities.
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