Deutsche Börse Venture Network will work together with CashLink to tokenize startup equity via CashLink’s blockchain-based platform. Investors can complete their investment process entirely digitally and startups can raise funds via security tokens.
Deutsche Börse, Germany’s leading stock exchange, is moving further into the digital securities realm. The company’s venture capital arm has sealed a new partnership that will allow institutional investors to purchase digital securities.
According to a press release from 30th October, Deutsche Börse Venture Network (DBVN) has partnered with Frankfurt-based fintech company CashLink. The partnership will enable investors with DBVN to complete their investment process entirely digitally using Cashlink’s blockchain platform.
CashLink tokenizes startup stock options. Investors receive the right to participate in the exit proceeds when the company gets sold. In a cash event, the investor will receive his share of the total based on how many tokens he owns. The goal is to make fundraising for startups easier and more cost-effective while providing investors an opportunity to invest in venture capital as an asset class without the hassle and costs that traditionally come with venture capital investments.
DBVN Director Peter Fricke said, “With this new offering through our partner, we simplify the process of raising capital for startups on our network, all within an existing regulatory framework.”
The offerings are exclusively available for professional investors and High Net Worth Individuals. CashLink has been part of DBVN’s Fintech Hub in Frankfurt since 2016.
Deutsche Börse is looking for digital opportunities
It’s not the first time Deutsche Börse shows interest in digital securities. In March, Deutsche Boerse, Swisscom, and Sygnum announced they would launch a digital assets exchange in Switzerland. The three firms aim at building a “trusted digital asset ecosystem” based on blockchain technology to facilitate the issuance of digital assets, market making, custody services, and banking services, in a regulatory compliant manner.
The company has also launched a division called “DLT, Crypto Assets and New Market Structures” that focuses on the further development of a Group-wide blockchain approach. It has also said it considers offering Bitcoin futures via its subsidiary Eurex, Europes largest futures and options market.
Thus, step by step, the company is investigating its blockchain opportunities. And Deutsche Börse is anything but short of cash. Chief Financial Officer Gregor Pottmeyer said in a recent earnings call with analysts that the company has 2 billion euros of “firepower’’ for potential deals.
Regulated exchanges are testing the waters
Deutsche Börse is Germany’s leading regulated stock exchange and the third-largest stock exchange in Europe. The market entry of established players like Deutsche Börse is paramount for crypto markets, as they have massive databases and enjoy their investors’ trust. Only if large exchanges enter the market, there will be a chance to create a liquid secondary market.
So far, however, most regulated exchanges have avoided crypto. The primary reason is the lack of regulations. However, as governments start putting such regulations in place, more exchanges start experimenting. Last month, for example, Börse Stuttgart, which is Germany’s second-biggest stock exchange, has launched a crypto trading platform, which it intends to build-up to a platform for the trading of security tokens.
Step by step, the industry is becoming more professional. Regulations, trust, and the presence of large players will eventually change the space and enable the development of a large-scale token economy.