In January 2019, while the U.S. Securities and Exchange (SEC) Commission was out to lunch, Germany’s regulator quietly licensed the country’s first STO. Bitbond, the crypto loan company who received the license has now launched its token sale.  Many believe the German regulator's move heralds a thaw in attitudes to blockchain projects that will extend throughout Europe.

Germany’s action is, loosely, analogous to the SEC approving an STO for non-accredited U.S. investors, something it has not yet done–there are a litany of exemptions companies in the US can apply for, but as of yet, none quite match what’s happening in Europe.

Many industry thought-leaders predicted that Blockstack’s world-first STO filing with the SEC would be the starting gun for this category of digital securities. The fact that the German regulators have jumped said gun and licensed such an STO is significant. Germany has, arguably, gone further than any other European country when it comes to cryptocurrency regulation.

Switzerland, France, Lichtenstein and Malta have made inroads towards the regulation of either security token offerings, ICO or crypto exchanges. In November 2018, Austria approved a security token offering for crypto mining company, Hydrominer. But unlike the license provided to Bitbond by the German regulator, BanFin, Hydrominer’s token sale is limited to Austria and Germany.


By virtue of its license from the German regulator, BaFin, BitBond is entitled to sell its tokens to any nation in the European Union (EU). EU passporting ensures that if a firm is authorized to undertake financial services by the regulator of one EU member state, that authorization extends to all 28 states.

And the BaFin decision has raised the hopes of startups in Germany and beyond. What’s not clear is exactly how far BaFin has opened its door.

Beacon for crypto companies

Green lighting Bitbond’s STO allows Germany to shore up its arsenal of financial tools. London’s preeminent position as a European financial center is waning, weakened by Brexit, and the German city of Frankfurt is ready to mop up the spoils. Meanwhile, Berlin is an established, international blockchain hub.

Our successful STO opens the door to many others in Germany and Europe. Others will follow our model and launch similar STOs—Radoslav Albrecht, Bitbond

Already, more than 30 crypto startups call Germany home. IoT-focused IOTA is based there, along with its backer, engineering giant Bosch. The likes of Deutsche Bank, Commerzbank, UBS, and pharmaceutical giant Merck are all busy colonizing the blockchain space.


Germany is looking to lure STOs from other EU countries, and steal a feather from the cap of neighboring Switzerland, which has created a name for itself as a crypto hub. It also hopes to shore up against the steady stream of German startups looking to jurisdictions such as Malta, where more regulatory clarity is deemed to be had. In July 2018, Malta passed landmark legislation to define cryptocurrencies, exchanges and more.  

But the gears of financial evolution move slowly in Europe. Malta—despite all its noise as a beacon for crypto companies desiring more favorable regulation—is yet to grant one license. Germany has bested this. However, it’s notable that over 130 other companies had submitted security tokens prospectuses to BaFin, before one—Bitbond—was approved.

Germany’s first regulated STO

Berlin-based Bitbond, which provides loans to small businesses, launched its fully-compliant STO token on the Stellar blockchain just two months after receiving its licence in January 2019.

The company’s CEO Radoslav Albrecht told Decrypt that the German regulator’s move marks a perceptible shift in policy and sends an encouraging signal to other contenders.

“Our successful STO opens the door to many others in Germany and Europe. The German regulator BaFin has accepted our approach to revolutionizing proof of ownership of a security via a digital token. Others will follow our model and launch similar STOs,” he said.

Armed with its licence, Bitbond aims to raise €3.5 million ($3.9 million) from its STO, which is open until July 8 for investors everywhere except the U.S. and Canada.

Successful business

Bitbond reports that it found the application process for a licence relatively simple. In Germany, a company must issue a prospectus for approval, and this final part of the process took a mere three months, according to Albrecht.

So how did Bitbond succeed where 130 others failed? The fact that it’s already a successful business with significant investment is likely to be a major factor.


The company provides loans to small businesses and claims to have processed over $15 million-worth to 150,000 users in 80 countries since its founding in 2013. It has raised millions in VC funding to support its loan offerings, with its latest round attracting $5.5 million.

Bitbond states that its primary objective in pursuing an STO is to diversify the types of investors it has. A regulated STO is also necessary because, as a regulated financial institution, it’s unable to issue investment products that are unregulated.

Encouraging innovation

Berlin-based blockchain bank Bitwala is keen to follow in Bitbond’s footsteps and obtain regulatory approval for its own STO. Coincidentally, Bitwala launched its STO, in the same month that BaFin approved Bitbond’s offering. The bank is now preparing to submit its prospectus for BaFin approval.

Bitwala is an established crypto firm founded in 2015. It offers a bank account for cryptocurrency trading and everyday banking, working together with a German partner bank. Among its investors are some of Germany’s highest profile investors and the Digital Currency Group, a New York-based VC firm focused on blockchain innovations.

Its STO aims to provide investors with a share of revenues and dividend payments, Bitwala’s CFO, Christoph Iwaniez, told Decrypt.

“We have chosen to issue a blockchain-based digital security as part of our funding strategy to finance our plans for rapid expansion, as we believe in the tokenized economy and feel encouraged to take the lead by tokenizing our own company,” he said.

But Bitwala is limited to a private token sale until it obtains a license. However, co-founder Ben Jones believes there’s a very good chance it will.

“The signals are all there: internationally operating German financial institutions recently said they will be moving into security tokens,” he said. “The regulatory environment in Germany and Europe as a whole is adapting swiftly, and the Merkel administration stands to present its blockchain strategy for Germany in summer.”


The approval for Bitbond nudges Germany to the fore in the race to become Europe’s crypto-powerhouse. But while the government pins down its blockchain strategy and the EU grinds out its latest proclamations (due in July), BaFin may bide its time.

Daily Debrief Newsletter

Start every day with the top news stories right now, plus original features, a podcast, videos and more.