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Development of security tokens in Berlin’s blockchain ecosystem

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Development of security tokens in Berlin’s blockchain ecosystem

By the term security token, equity token, tokenized security or digital security, BaFin understands tokens, the holders of which are entitled to membership rights or claims under the law of obligations that are comparable to those of a shareholder or holder of a debt security (e.g. claims to dividend-like payments, co-determination, Repayment claims, interest).

The first STOs were carried out in 2017 as part of the ICO boom in order to continue to enjoy the efficiency and cost advantages of a tokenized capital market issue via smart contracts by complying with regulatory requirements and at the same time to circumvent the many disadvantages of unregulated ICOs.

With a volume of 442 million US dollars in 2018 and 450 million in 2019, however, the expected hype about the STOs did not materialize and other topics such as NFT, social tokens or DeFi dominated the headlines. At the end of 2020, the topic of security tokens picked up again with the entry of institutional investors such as Warburg Bank , and a current report by Tangany estimates the market volume of security tokens to be more than 900 billion euros for 2026. 

Another milestone for the German STO market is the tokenized issuance of registered shares by TEN 31 Bank as the first company in the history of the German financial industry, the bank is expected to offer tokenized registered shares to the public for subscription in October. The corresponding securities prospectus has already been approved by BaFin. In addition to the classic IPO, stock corporations in Germany now have a new and efficient option for raising capital through equity. Due to the legal framework, only financial vehicles similar to bonds have so far been tokenized in Germany. However, the concept of tokenized registered shares has been known for a long time and would have been possible much earlier. As early as September 2019, Lutz Auffenberg, the founder of Fin Law, described in his blog the option to tokenize registered shares under German law.

The role of Berlin in the current upswing in security tokens 

Even if Frankfurt is generally regarded as the center of the German financial industry, Berlin has played an important role since the beginning of the German STO market. In March 2019, the first German STO was approved by BaFin. The issuer was the Berlin company Bitbond Finance and although the financing target of 3.5 million euros was missed, the result of over 2.1 million euros for a completely new asset was still more than remarkable.

The latest news from Berlin came from BMCP GmbH last month. As a technical service provider, they issued a security token with a volume of 25 million euros on August 16, together with the TV and print magazine “Welt der Wunder”. World of Miracles reaches 15 million viewers every month through television alone and a further 12 million through its online presence.

More exciting news from Berlin came this summer with the first Security Token Offering in the German automotive industry. The offer of the Berlin company Auto1 Fintech is aimed at professional investors and the technical processing is taken over by Ive.one, the investment platform of the Frankfurt fintech Agora Innovation.

The “Sachwerte digital” congress , which will take place for the 5th time in 2021, will also take place in Berlin again. On November 18, during a panel discussion at Motorwerk Berlin with representatives of various banks and also Sven Wagenknecht, the editor-in-chief of BTC-ECHO, the topic of security tokens will be discussed.

About BerChain eV

BerChain eV is a non-profit, member-run association based in Berlin, which connects and promotes the Berlin blockchain community from the entire blockchain ecosystem and beyond and positions Berlin as the global blockchain capital. BerChain enables science and research activities, education and training around the topic of blockchain and thereby promotes Berlin’s local blockchain ecosystem. In this way, BerChain wants to create a unique interdisciplinary environment and accelerate the growth of the local blockchain community.

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