Context

Tokenization involves transforming tangible assets or entitlements from the physical world into digital tokens, which can be stored, exchanged, and overseen on a blockchain. This process offers numerous advantages, including heightened liquidity, lowered expenses, improved transparency, and the facilitation of fractional ownership. Within this manual, we will delve into various instances of tokenization within Germany, a nation leading the way in blockchain innovation. Source: wyoleg.gov

Macro data

Germany has a population of 83.3 million and a GDP of $4.12 trillion in 2023. It has a high GDP per capita of $12,246 and a negative growth forecast of -0.3% in 2023. It is a highly open economy with trade flows equal to 98.62% of its GDP. The unemployment rate is 5.7%, indicating a healthy labor market. It uses the euro (€) as its currency, which provides stability and integration with the EU. It has a low level of remittances, with only 0.7% of its GDP coming from or going to other countries. It has a high level of private consumption, which increased by 3.4% year-on-year in 2023, driving economic growth. Source: Economy-finance.ec worldbank.org

Digitalization

Germany has a high level of internet usage, with 93.1% of the population online. It also has a high rate of online shopping, with 46% of the population using Paypal for online shopping. As of early 2023, Germany had 119.6 million active cellular mobile connections, accounting for 143.6 percent of the total population. The rate of online bank account access is 48.58%. Germany has a very high rate of digital payments, with the total transaction value in the Digital Payments market projected to reach US$257.60bn in 2023. Source: datareportal.com statista.com statista.com

Banking data

Germany is renowned for its strong banking sector. To put it into perspective, the total assets held by all banks in Germany amounted to approximately 10.58 trillion euros in 2022. This is a significant proportion of the German economy, underscoring the importance of the banking sector to the country. Most adults in Germany have access to basic financial services, indicating a high level of financial inclusion. In fact, 99% of adults in Germany have a bank account. Digital banking is efficient, easy and streamlined with the directives of EU making services highly accessible to institutional and retail customers. Source: statista.com datatopics.worldbank.org

Context

Tokenization involves transforming tangible assets or entitlements from the physical world into digital tokens, which can be stored, exchanged, and overseen on a blockchain. This process offers numerous advantages, including heightened liquidity, lowered expenses, improved transparency, and the facilitation of fractional ownership. Within this manual, we will delve into various instances of tokenization within Germany, a nation leading the way in blockchain innovation. Source: wyoleg.gov

Macro data

Germany has a population of 83.3 million and a GDP of $4.12 trillion in 2023. It has a high GDP per capita of $12,246 and a negative growth forecast of -0.3% in 2023. It is a highly open economy with trade flows equal to 98.62% of its GDP. The unemployment rate is 5.7%, indicating a healthy labor market. It uses the euro (€) as its currency, which provides stability and integration with the EU. It has a low level of remittances, with only 0.7% of its GDP coming from or going to other countries. It has a high level of private consumption, which increased by 3.4% year-on-year in 2023, driving economic growth. Source: Economy-finance.ec worldbank.org

Digitalization

Germany has a high level of internet usage, with 93.1% of the population online. It also has a high rate of online shopping, with 46% of the population using Paypal for online shopping. As of early 2023, Germany had 119.6 million active cellular mobile connections, accounting for 143.6 percent of the total population. The rate of online bank account access is 48.58%. Germany has a very high rate of digital payments, with the total transaction value in the Digital Payments market projected to reach US$257.60bn in 2023. Source: datareportal.com statista.com statista.com

Banking data

Germany is renowned for its strong banking sector. To put it into perspective, the total assets held by all banks in Germany amounted to approximately 10.58 trillion euros in 2022. This is a significant proportion of the German economy, underscoring the importance of the banking sector to the country. Most adults in Germany have access to basic financial services, indicating a high level of financial inclusion. In fact, 99% of adults in Germany have a bank account. Digital banking is efficient, easy and streamlined with the directives of EU making services highly accessible to institutional and retail customers. Source: statista.com datatopics.worldbank.org

1. BitBond

Type: Debt Token

Bitbond, a company offering services in SME lending introduced the Bitbond Token (BB1), which was Germany’s first security token approved by the regulatory authority BaFin, representing a corporate bond.
The par value per token was €1. The bond was a subordinated unsecured debt. The bond was issued in 2019, with a bond maturity of 10 years, therefore maturing in 2029.

Token holders received 1% interest on their invested amount every quarter (4% fixed coupon rate per year). Additionally, they received a variable coupon rate of 60% of pre-tax profit of Bitbond GmbH paid out once per year. Both the quarterly and the annual coupons continued for 10 years, at which point the token reached its maturity and was bought back at its face value of €1 per token. All coupons and the repayment of BB1 were EUR denominated and paid in XLM using the Stellar blockchain to holders of BB1 at the time of a payment due date. This structure provided an attractive investment opportunity for those interested in the growing field of blockchain and digital assets.

The capital used from the bond issuance is distributed in investments in SME loans on the Bitbond platform (40%), financing of junior notes to leverage available capital (40%), provision of working capital to Bitbond (10%) and administration, marketing, bounty program costs (10%).

Source: Website, stomarket.com

2. Fundament Group

Type: Tokenization of real-estate

Fundament, a real estate-focused platform, successfully built and launched the first security token for real estate investments, gaining approval from the German Federal Financial Supervisory Authority (BaFin).

The Fundament Real Estate Token introduces a novel approach to real estate investment by providing a digital security backed by a diverse portfolio of German real estate valued at €250 million. This tokenized bearer bond is built on the Ethereum blockchain and operates under the ERC-20 token standard.

Investors have the flexibility to choose between investing in euros or the cryptocurrency Ethereum (ETH), with a minimum investment amount of €1. The token comes with subordinated token-based bonds featuring annual variable interest rates.

Fundament’s groundbreaking Real Estate Token addresses the traditional illiquidity of real estate investments by injecting liquidity and enabling global tradeability. Its prospectus, approved by BaFin, ensures compliance and regulatory oversight.

Source: stomarket.com

3. Bloxxter

Type: Tokenization of real-estate

Bloxxter, a Hamburg-based startup, successfully tokenized two prominent Leipzig properties — the Städtisches Kaufhaus and Reclam Carrée.

These properties were made available for investment, starting at €500, with a committed annual return of 3%. Bloxxter aimed to raise €39m with the security token offering while providing a simplified real estate investment vehicle with the use of blockchain technology, reducing costs and streamlining processes.

The Städtisches Kaufhaus and Reclam-Carée, both historically significant, offered investors stability and charm, following extensive renovations in the 1990s. The tokenized assets were premium properties in strategic locations which enhanced the appeal of the investment community.

Risks included issuer default, subordinated loans, lack of deposit protection, and tradability challenges.

Source: Website

4. Metzler

Type: Tokenization of funds

Metzler Asset Management (MAM) introduced German tokenized funds, known as crypto funds, with tokenized assets valued at around €700 million. Germany’s regulatory framework supporting crypto funds included the Electronic Securities Act (eWpG), permitting the use of a centralized or decentralized ledger for bearer bonds. The Fund was tokenized using the Polygon blockchain.

Management of the crypto securities register was handled by one partner, while another facilitated end-to-end processing of tokenized fund units for the first time. Metzler conducted a three-month pilot, limiting fund investment to a select audience. The issuer of the fund shares also acted as both the investor and custodian.

Source: ledgerinsights.com

Are you working on a project that involves tokenizing real-world assets? Our guide focuses on tokenization use cases in Germany that deal with real-world assets. If you don’t see your project covered in our guide, please reach out to our editorial team at [email protected] and we’ll be happy to consider including it.