KfW withstands "stress test" with third blockchain bond
KfW has successfully changed both the registrar and the underlying blockchain during the term of its third digital bond. The trial demonstrated the robustness of digital capital market infrastructure.
KfW, Germany's state-owned development bank, has successfully completed a "stress test" of its third blockchain-based bond, demonstrating the robustness of digital capital market infrastructure. For the first time in Germany, both the registrar and the underlying blockchain for a digital security, issued under the Electronic Securities Act (eWpG), were changed during the bond's term. The trial concretely showed the prerequisites still missing for broader adoption and scaling.
On September 23, DekaBank took over the role of registrar from Cashlink. Simultaneously, the register was moved from the initially used Polygon blockchain to the SWIAT infrastructure, which will become part of Regulated Layer One (RL1), a new blockchain infrastructure for the European financial market. For investors, nothing changed during this "stress test." According to KfW's knowledge, this was the first time in Germany that the registrar, register, and underlying blockchain of a digital security were changed during its term.
KfW's Chief Treasurer Tim Armbruster emphasized that the successful test is more than a technical proof. "It shows that digital capital market infrastructure functions even with a deliberate change of central components during operation. For the next development step, we now need common standards and interoperable systems. Only in this way can we create scalable structures and strengthen Europe's competitiveness and digital sovereignty in the capital market," he stated.
A key insight concerned the interaction between different DLT (Distributed Ledger Technology) systems. Polygon and SWIAT/RL1 currently use different technical standards. Consequently, the existing bond tokens, which are electronic representations of the securities, could not be transferred directly between the infrastructures. Instead, DekaBank, as the new registrar, created new tokens on SWIAT, while Cashlink, as the previous registrar, deleted the corresponding tokens on Polygon. The change proceeded smoothly despite the different technical standards.
KfW continues to drive the development of digital capital markets. In December 2026, the bank will for the first time use the Eurosystem's new Pontes pilot solution for settlement in central bank money, enabling the settlement of DLT-based transactions. KfW has also joined the Appia Contact Group to continue the dialogue on future European infrastructures for digital assets.