Inside Deka: The blockchain Pfandbrief debut

Both the placement of the Mortgage Pfandbrief and the blockchain-based settlement went very well. We were able to attract a total of six investors, including institutions that already have experience with crypto securities. But we also attracted new investors who were investing for the first time because they recognized the technology´s potential and aimed to be an early adopter.

Deka maintains its crypto securities register on the SWIAT network, which will transition into the Regulated Layer 1 initiative. This initiative aims to create a regulated and scalable infrastructure for digital capital market products. Regulated Layer 1 currently includes ten financial institutions and is open to additional participants who want to join this initiative.

In the short term, there are no funding advantages. However, blockchain technology offers the opportunity to generate additional cost savings and thus (quality) gains, particularly for securities settlement: it has the potential to make processes more efficient, faster and more secure. In order to benefit from the entire universe of investment options investors fundamentally must become capable to process blockchain securities.

To create a level playing field, crypto securities must be treated in the same way as traditional securities, particularly with regard to their eligibility as central bank collateral. For a functioning market, tradability and repo eligibility must also be ensured through a liquid secondary market. In addition, cash-on-chain solutions are required to fully unlock the benefits of the technology.

This year, tangible progress has been made on both fronts: with 21X and 360X, two platforms are now live that enable secondary-market trading. And through the ECB’s Wholesale Settlement Initiative (Pontes, Appia), significant work is in progress to bring cash-on-chain solutions to the market.