Fundament Group: BaFin Approves $280M Blockchain Bond For Real Estate

28 August 2019

The German regulator greenlights an unprecedented $280 million Ethereum-based real estate bond for security issuance firm the Fundament Group

by Daryl Charman

On 23rd July 2019, the German Financial Market Supervisory Authority (BaFin) approved a blockchain-based bond issuance for Fundament Group. The Berlin-based security issuance firm behind it mainly invests in commercial real estate, with holdings in Berlin, Hamburg, Jena, Rostock and Fulda.

The backing from BaFin is the first of its kind and is set to completely transform the future of the real estate industry.

Fundament Group’s bond is based on the Ethereum blockchain and is supported by a vast portfolio of properties around Germany, worth $280 million.

The co-founder of the firm, Florian Glatz says:

As the first company to receive approval from the German Financial Market Authority for a blockchain-based real estate bond, we are excited to enter the sales process for the Real Estate Security Token, while already preparing the tokenisation of other highly attractive assets.

The dawn of a new tokenised real estate industry

The Fundament Group is made up of experienced lawyers, political advisors and real estate developers, giving them every chance to create a smooth link between the traditional capital market and the blockchain world.

This move will give investors from every corner of the world access to the German real estate market via its tokenised bonds.

Furthermore, Fundament will offer them the flexibility of deciding whether to make deposits and withdrawals denominated in Euros or the ether cryptocurrency.

This landmark breakthrough with BaFin is set to start a trend within the real estate industry. In fact, several firms are already reportedly trying to tokenise real estate holdings.

Unlike many other asset classes, real estate has always been quite hard to trade. So, by breaking it up into tokens, it means that parties can do this much more easily.

It’s certainly a welcome transition which will start to snowball in the next 12 months.
Another pro-blockchain move made by Germany BaFin’s move to greenlight a blockchain-based bond issuance follows further positive news towards crypto and blockchain coming in the form of Germany’s central bank.

In a monthly bulletin called “Crypto tokens in payment transactions and in securities settlement”, the Bundesbank discussed the potential pros and cons of central bank digital currencies (CBDCs), as well as stablecoins. In particular, Facebook’s new crypto project, Libra.

Within the document, Germany’s central bank stated that global projects like Libra shouldn’t be made impossible as they are designed to increase prosperity and transaction costs.

The bank also highlighted that “A government should be as technology-neutral as possible, so that the benefits of innovation can be made available for the financial sector.”

This is good news for any businesses who are keen on utilising the vast benefits of blockchain technology within Germany in the immediate and distant future.

Only time will tell to see if the Fundament Group’s breakthrough with BaFin and Bundesbank’s open attitude towards crypto and blockchain will transform Germany into a new haven for investors and businesses alike.

This article was originally published in “Blockchain Compliance Bulletin”, number 8. Cover image: © anyaberkut/AdobeStock

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