Dekabank is putting its blockchain software subsidiary Swiat, founded in February 2022, on a broader footing.

The Landesbank Baden-Württemberg (LBBW), the British-Asian bank Standard Chartered and the Frankfurt fintech Comyno are giving the software developer for financial market infrastructure further money.

The aim of the new shareholders and partners is to "create a uniform standard for the processing of blockchain-based securities using Swiat", as stated in a joint press release on Thursday.

Hanno Mussler

Editor in Business.

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The blockchain digital network has so far been known above all for the mining and transmission of cryptocurrencies such as Bitcoin and Ether, the security of which is to be ensured in a decentralized manner by storing them on thousands of servers at the same time.

That is not the point here.

Rather, as a securities house for the savings banks, Deka concentrates on the sale (issuance) and safekeeping of securities via blockchains that it operates privately.

Four fintechs have crypto custody licenses

The financial regulator Bafin closely examines whether it is safe to issue and store securities in blockchain networks.

Neither Deka nor any other major German bank has yet received a crypto custody license from Bafin.

However, after an approval phase of at least one year, the fintechs Tagany, Kapilendo, Coinbase and Upvest were granted such a license.

Even if operations here have been running on a small scale so far, it is already clear that digital securities will be issued and stored on different blockchains in the future.

Behind Kapilendo, after the acquisition in September 2021, is the private bank Hauck & Aufhäuser with its Chinese owner Fosun, which has a strong foothold in Luxembourg in the custody of securities for funds.

Securities issuers and custodians, investors and trading venues will have to work with a variety of blockchains.

This requires software and infrastructure that is interoperable with various blockchains, says Marion Spielmann from Deka.

In an interview with the FAZ, Spielmann, who is responsible for banking business areas and custodian, outlines the challenges as follows: “Digital assets will be moved and issued on different blockchains.

Investors will want to keep digital assets in their wallets.

The tradability of digital assets requires the connection to trading venues.

A trustworthy ecosystem is needed to ensure the authenticity of the data for all participants in this network.

We want to set a standard for this with Swiat,

to simplify the previously very fragmented market,” says Spielmann.

The new group of partners now wants to persuade other banks to get involved - "not just as users, but also as co-investors," says Alex Manson of Standard Chartered.

Competition for the German Stock Exchange

At present, securities are generally held centrally in a register of Deutsche Börse AG.

In future it will be possible for issuers of securities such as shares or bonds to keep the register themselves or to commission third parties to do so.

Deka and its partners sense a new business area here.

After all, the law on electronic securities (eWpG), which came into force in 2021, has long made it possible to sell bearer bonds in electronic form instead of the classic securities certificate.

Deka estimates that in 2026 more than 15 percent of gross net new issuance will be issued as crypto securities.

As securities become more digitized, the need for crypto custody is likely to increase as well.

"The great advantages of decentralized blockchain applications compared to classic central infrastructure are the higher efficiency, speed and security," says the founder and CEO of Comyno Markus Büttner.

Securities lending, repurchase transactions, derivatives and bond issues are to be processed in real time in the future.

For this purpose, the Swiat platform, as a joint venture, will in future supply the software that will link all market participants with each other.

We are talking about a new, decentralized financial market infrastructure.