Fundament unveiled a €250 million BaFin-cleared Ethereum bond offering

Fundament Group announced on July 23, 2019 that it had obtained approval from Germany’s Federal Financial Supervisory Authority, BaFin, for a public offering of as much as €250 million in token-based real-estate bonds.

The announcement brought a conventional securities instrument and a public blockchain into the same regulated offering. Each €1 bond was to be represented by a token in the issuer’s smart contract on Ethereum. That structure made the development institutionally significant without turning the tokens into cryptocurrency in the monetary sense: investors were purchasing euro-denominated debt issued by Fundament RE Germany GmbH.

Chronology matters. The prospectus was dated July 11, BaFin approved it on July 17, and the issuer published it on July 18. July 23 was when Fundament publicly presented the regulatory milestone and emerged from relative obscurity before the international digital-asset market.

What BaFin approved

The prospectus authorized an offering of as many as 250 million subordinated, token-based bonds with a nominal value of €1 each. A 5% premium could be added to the subscription price. The minimum nominal subscription was €1 for euro payments or 0.01 ETH when paying with ether.

Although payment could be made in ether, the issuance currency and bond denomination remained euros. The prospectus said each €1 obligation would be represented by one token in an Ethereum smart contract. It listed no conventional German securities identification number or International Securities Identification Number for the bonds.

BaFin confirmed to CoinDesk that this was the first prospectus it had approved for blockchain-based real-estate bonds, while emphasizing that it was not the regulator’s first approval involving blockchain technology generally. That narrower description is more defensible than Fundament’s broader promotional characterization of the product as the first fully regulated real-estate token.

Approval of the prospectus did not constitute a government guarantee, a judgment that the investment was suitable or validation of the properties’ prospective performance. The prospectus described BaFin’s review as examining whether the document was complete, understandable and internally consistent.

Tokens did not confer property ownership

The offering was sometimes described as selling fractions of German commercial property, but its legal structure was debt. Token holders would be creditors of the issuer, not shareholders, partners or direct owners recorded on property deeds.

The bonds were also subordinated. Their scheduled maturity was after December 31, 2033, and the issuer retained an option to extend the term in stages by as many as 10 years, potentially through December 31, 2043. Those provisions made the instrument materially different from a freely redeemable token backed one-for-one by an immediately available asset.

The prospectus disclosed that the specific real-estate investments had not yet been selected, making the offering a blind pool. It also said the newly formed issuer had not begun operating as of the prospectus date. Its audited 2018 stub-period accounts showed €25,000 of subscribed capital and a net loss of €18,456.96.

These disclosures do not establish that the project would fail. They show why regulatory approval and investment performance were separate questions.

Why the structure mattered

Initial coin offerings had commonly tried to avoid classification as securities. Fundament instead submitted the instrument to securities review, produced a detailed prospectus and attached blockchain tokens to legally defined creditor claims.

That approach offered a possible route for tokenization inside existing capital-markets law. It also exposed the limits of the technology narrative. Ethereum could represent and transfer the bonds, but it could not select profitable properties, guarantee repayment or create secondary-market liquidity by itself.

No completed fundraising total, token trading volume or market-price reaction is attributed to July 23. The €250 million figure was the maximum nominal offering size, not money already raised or the market value of an operating property portfolio.

Later documentary context

A December 2019 prospectus supplement later confirmed the July approval and publication dates and recorded a subsequent increase in the maximum nominal offering to €500 million. That later expansion was not part of the terms publicly discussed on July 23 and does not alter the event-day €250 million framing.