Saxony-Anhalt Plans Crypto Bond - Expert Calls it 'PR Stunt'

The German state of Saxony-Anhalt plans to raise up to €100 million in new debt by issuing a crypto bond, utilizing controversial blockchain technology. Finance Minister Michael Richter (CDU) stated the crypto bond is a concrete contribution to implementing the state's digital strategy, aiming to create a secure, forgery-proof recording system and speed up transactions.

The blockchain technology, forming the basis for cryptocurrencies like Bitcoin, enables the establishment of digital trust among unknown parties. The system will operate on a private network where over 50 institutions and five custodian banks are already active. All prospective buyers must register to prevent money laundering. While the ministry describes the system as secure, detailed costs for launching the crypto bond have not been disclosed, only that they are "market-standard."

However, IT security expert Marian Kogler from Halle is critical of the initiative. He argues that blockchain technology is unnecessary for a bond, especially since involved institutions already trust each other and adhere to laws. Kogler believes a standard database would suffice for registering ownership and calls the project a "PR stunt" with unclear real value.

Saxony-Anhalt's finance ministry refers to a 2021 law permitting electronic securities. They confirm, however, that this specific crypto bond requires authorization from the Federal Financial Supervisory Authority (BaFin), similar to other electronic securities. The ministry has not detailed further technological advantages or differences compared to other digital securities trading options, reinforcing critics' views on the project's questionable innovation.