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German Bank Tokenize Securities Using Stellar’s Blockchain

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German banks have shown a keen interest in crypto assets as of late. German Bank von der Heydt, which was established in 1754, announced that it’s developing a special-purpose Euro stablecoin.

Rather than using a private blockchain, the bank opts for the Stellar ecosystem.

The purpose of this stablecoin is to make tokenised securities private placements easier for investors. The bank closed a partnership with Bitbond, a blockchain financial services provider, in order to integrate tokenisation into its platform. Digital securities are going to be tokenised onto the Stellar blockchain, so institutional clients will be able to make private placements.

The tokenisation can simplify equity sales and eliminate much of the associated frictional costs, according to the bank. “Securities can be traded directly without an intermediary, making financing much cheaper and less complicated,”

Clients will be able to securely store tokenised equity in a custody solution developed by Bitbond and von der Heydt. The solution received approval from the German financial regulator BaFin after changes in the law meant providers required a license to continue offering cryptocurrency custody.

Investors will be able to purchase tokenised equity using a euro stablecoin that will also be issued by von der Heydt. Clients will be able to convert euros into stablecoins, which can also be stored in the bank’s custody solution.

Bankhaus von der Heydt and Bitbond

Germany-based Bitbond has been building blockchain-based solutions for the financial markets since 2013. They provide online lending as well as tokenisation services.
In late 2019, the German parliament passed a bill allowing German banks to buy, sell, and store digital assets. The legislation allows for traditional banks to store digital assets such as bitcoin, for example, on behalf of third parties. The new law took effect January 1st, 2020.

Today, the bank leverage Bitbond to provide asset structuring as well as asset servicing, powered by the blockchain.

Bankhaus von der Heydt also offers securitization services. According to the bank’s website, the services offer “modern solutions to make a wide variety of assets liquid.” Bitbond says the bank also plans to develop its own Euro-backed stablecoin and issue security tokens.

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