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Metzler Asset Management Launches Tokenized Funds: Initiating Germany’s Crypto Fund Revolution – Ripple (XRP) and Stellar (XLM) in the Portfolio?

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  • Metzler Asset Management (MAM) collaborates with fundsonchain and Cashlink to issue Germany’s first tokenized fund shares, bypassing the need for a Central Securities Depository (CSD).
  • The issuance comes on the heels of Germany’s newly minted legislation, the Electronic Securities Act (eWpG), and Crypto Fund Units (KryptoFAV) regulation, both of which facilitate the use of blockchain technology in asset management.

Riding the Wave of Legislative Innovation

Metzler Asset Management (MAM) has paved the way in Germany’s burgeoning tokenized asset sector by issuing its first tokenized fund shares. Contrary to what the term “crypto funds” may imply, these are not cryptocurrency-based assets. Rather, the issuance adheres to Germany’s ‘crypto’ securities laws, which obviate the need for a Central Securities Depository (CSD), provided a Distributed Ledger Technology (DLT) or blockchain is used to record ownership.

To clarify, a CSD is a financial organization holding securities such as shares to enable electronic transactions. DLT, on the other hand, offers a decentralized system for recording ownership, bypassing the need for centralized control. MAM’s pilot program runs for three months and is developed in partnership with fundsonchain and Cashlink, entities previously engaged in Germany’s crypto bond market.

The issuance springs from the soil of recently passed German legislative initiatives—specifically, the Electronic Securities Act (eWpG) and the Crypto Fund Units (KryptoFAV) regulation. The eWpG, for instance, grants legal status to electronic bearer bonds registered on centralized or decentralized ledgers. Earlier, Siemens capitalized on this legislation to issue a €60 million bond on a public blockchain, allowing peer-to-peer transfer of the bonds.

Similarly, the KryptoFAV regulation extends eWpG guidelines to certain kinds of tokenized funds. However, these regulations don’t encompass investment funds structured as limited liability companies (LLCs). What this essentially means is that the fund units, or shares, can be issued and managed more efficiently and cost-effectively using blockchain technology.

Cashlink brings its substantial credentials to the table as the registrar of crypto securities, having participated in 44% of the 52 crypto bond issuances in Germany. Meanwhile, fundsonchain manages end-to-end processing of tokenized fund units, marking its debut in fund issuance. As for Metzler, while MAM is the issuer of the fund shares, Bankhaus Metzler serves as both the investor and the custodian.

The tokenization allows for “fractionalization of funds,” whereby smaller fund sizes become feasible, or investors can enter with smaller commitments. This dynamic pilot project not only disrupts conventional fund distribution mechanisms but also augments financial inclusivity.

Unconfirmed reports suggest that Deutsche Börse Group’s subsidiary, Clearstream, and other international entities like abrdn in the UK are also exploring similar tokenized assets, signalling a seismic shift in global asset management paradigms.

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Marcel Knobloch
Marcel Knobloch
Marcel is the managing partner of ETHNews and is also known as Collin Brown in the crypto community. He is a seasoned Bitcoin investor who entered the crypto scene during its early stages and has since become a veteran trader in both the cryptocurrency and forex markets. His journey began in 2012 when he made his first investment in Bitcoin, marking the beginning of his deep-rooted passion for blockchain technology and digital assets. With a mission to demystify the intricacies of blockchain for the masses, Marcel endeavors to bring the world of cryptocurrencies closer to everyone. His insightful reports are dedicated to shedding light on the latest developments and innovations within the realms of Bitcoin, Ethereum, Ripple (XRP), IOTA, VeChain, Cardano, Hedera, and numerous other cryptocurrencies. Marcel's in-depth analysis and commitment to providing accessible information make him a trusted source for both novice and experienced crypto enthusiasts. Marcel's academic background includes a Master's Degree in Business Education, which has equipped him with a solid foundation in financial markets and investment strategies. Over the past decade, he has amassed invaluable experience working with various startups across the globe, enriching his knowledge and understanding of the ever-evolving cryptocurrency landscape. With his wealth of expertise and dedication to empowering others with crypto knowledge, Marcel continues to be a driving force in the cryptocurrency community. Business Email: marcel.knobloch@hotmail.com Phone: +49 160 92211628