• From issuer to investor in crypto securities: a change in perspective is an important step on KfW’s digital learning journey
• Germany’s first “Blockchain Pfandbrief”, issued by Berlin Hyp, is KfW’s first DLT-based investment
• KfW contributes to the development of the secondary market for DLT-based securities – DekaBank is a central partner

KfW is consistently continuing its learning journey in terms of digitalisation of its capital market activities, becoming an investor in a crypto security. Specifically, KfW has invested EUR 10 million in Berlin Hyp’s blockchain-based Pfandbrief for its liquidity portfolio. The covered bond was issued in August 2024 and is the first digital mortgage Pfandbrief in Germany on the basis of the eWpG (German Electronic Securities Act). It has a volume of EUR 100 million and matures in July 2027. DekaBank is the registrar and the Pfandbrief was issued using the SWIAT blockchain. SWIAT GmbH is a German fintech company that develops software for a decentralized financial market infrastructure.

KfW acquired the crypto security from DekaBank on 25 April 2025 acting as market maker as part of an OTC transaction (over-the-counter). The transaction was successfully settled today.

“As an internationally very active capital market participant, we want to put a strong emphasis on digitalisation by highlighting innovation opportunities as an issuer and as an investor. We see clear long-term advantages in the use of DLT (Distributed Ledger Technology) in the financial market, as transactions are carried out faster and more efficiently”,

explains Tim Armbruster, Treasurer at KfW Group.

With this transaction, KfW is once more pursuing its objective of applying the eWpG in practice and sharing its experiences with capital market participants. The ultimate aim of the globally active issuer is to convince as many capital market players as possible to place a particular focus on the digitalisation of the capital market business.

Blockchain access not mandatory for investors

As part of the current investment for KfW’s liquidity portfolio, the bank explored various technical purchase options for a crypto security in order to understand what was required for them as well as their advantages and disadvantages, in addition to expanding its own knowledge. One important finding of this groundwork is that investors have various possibilities when it comes to participating in crypto security transactions and that they do not necessarily have to create complex technical prerequisites or even their own technical access to the underlying blockchain.

KfW has therefore decided to make the purchase via established processes and payment systems, with DekaBank as its custodian bank. In this role, DekaBank moved the bonds from its own account into the customer account on the blockchain. It then made the book entry in KfW’s custody account using the traditional securities booking system.

“Blockchain has the potential to significantly transform the capital market — from enhancing infrastructure efficiency to enabling new products and generating potential demand for them,”

says Thorben Lüthge, Head of Markets at DekaBank.

“In this pioneering phase, the commitment of established and well-known institutions such as KfW as an investor in the secondary market is a strong signal. We are pleased to contribute our expertise as market maker, custodian, and registrar, and to support KfW in its innovative projects.”

Liquidity in the secondary market essential for market development

KfW has made a conscious decision to invest in the secondary market aiming at contributing to the development of liquidity for DLT-based securities. In order for the crypto securities segment, which is still in its infancy, to be able to unleash its full potential, it is important to ensure that there is both supply and consistent demand.

Secondary market liquidity is an essential component of a scalable DLT-based capital market. KfW intends to continue to actively support this development as an issuer and investor. Other components include the settlement of DLT-based transactions in central bank money and the central bank eligibility of DLT-based securities. Currently, the market for DLT-based securities is still characterised by a large number of technical solutions and different jurisdictions. European harmonisation would be ideal for scalability.

Source: KfW