A bank in Munich, Germany, Bankhaus von der Heydt, is set to issue tokenized securities on the public Stellar blockchain. This bank has been in operation for 265 years. The decision to use Stellar comes as no surprise as the blockchain, just like its counterpart XRP, was created for banking systems. Announced on Feb 10, the bank has partnered with Berlin-based blockchain firm Bitbond to leverage blockchain technology in the tokenization of securities.
Bitbond has been offering blockchain-centric solutions such as lending and tokenization since its launch in 2013. Through a collaborative effort, Bankhaus von der Heydt and Bitbond will be creating a euro stablecoin that will allow investors to buy tokenized securities on the Stellar blockchain.
Moreover, von der Heydt and Bitbond have been providing regulated digital asset custody solutions to clients since 2019. This solution will also be used by users to safely store their tokenized securities. Simply put, it will be possible for clients to store their stablecoins (converted from euros) in von der Heydt’s custody solution.
A spokesperson of the bank noted that tokenization cuts unnecessary costs because of the ease with which securities are traded:
“Securities can be traded directly without an intermediary, making financing much cheaper and less complicated.”
However, at the moment, the bank is not planning to allow the general public to use the tokenization platform as the digitized securities will only be offered through private placements.
German Banks Are Digital Assets’ Latest Ally
Notably, German banks are in favor of cryptocurrencies. In late-November last year, German lawmakers passed legislation enabling banks in the country to directly trade and store digital assets. This legislation became effective on January 1, 2020.
Most recently, approximately 40 German banks have filed official applications to German’s financial regulator, BaFin, requesting to be allowed to offer regulated custody for digital currencies under the new anti-money laundering law.
The use of Stellar’s blockchain by von der Heydt’s is good news for crypto as it indicates that blockchain tech is increasingly finding more use cases in money systems. Further adding to the bullish case is the fact that a good number of banks in Germany want to offer cryptocurrency custody. The future will indeed be very interesting.