Independent blockchain verdict for a Frankfurt fund administrator

Situation

A fund administrator in the Frankfurt Westend, 45 staff, keeping the investor registers for about 30 closed-end funds run by other managers. A software vendor had pitched a tokenisation project: put the investor register on a blockchain, issue each fund share as a token, and let investors hold it in a wallet, for about €280,000 plus a five-year support contract.

Two larger fund clients had asked about digital fund shares in the past year. The only technical opinion on the table was the vendor’s own. The board wanted an independent verdict before signing.

Approach

The entry tier is a feasibility and architecture review for one use case, so the four weeks went on the vendor’s proposal. The method is drawn from the founder’s own years building a digital-asset issuance platform, where every project starts with the same question: does a shared ledger earn its place against a conventional database?

Week one was interviews with the operations team and the two client managers. Week two split the proposal into its two real parts: the settlement record, the internal ledger of who owns which fund share, today kept in three spreadsheets and reconciled by hand each quarter end, and the customer-facing token, the wallet each investor would hold. Week three costed both against a conventional rebuild and two ledger options, a permissioned ledger run with the custodian and a public network with a private layer. Week four wrote the recommendation.

The regulatory questions went to the firm’s lawyer. Germany has a dedicated law that lets securities exist as electronic register entries in place of paper certificates, and the EU has a regulation for crypto-assets with rules for anyone issuing or holding them for others. Which applies to a tokenised fund share, what licence the register keeper needs, and who may hold the investors’ wallets are questions for a lawyer, so the review listed them in plain words.

Result

In this scenario the verdict was split: yes for the settlement record, no for the customer-facing token. A shared ledger between administrator, custodian and fund managers removes the quarter-end reconciliation, and the two ledger options came in at €900 to €2,400 a month to run. The customer-facing token added about €180,000 to the build, made the firm the keeper of investor wallets, and served two client requests that a monthly statement met just as well. The board declined the full proposal and asked the vendor to quote the settlement record alone, at about a third of the price.

What it cost

€4,900 fixed price, quoted before the work started, for a feasibility and architecture review of one use case: the yes-or-no with its documented reason, two ledger options with running-cost estimates, a written recommendation with a cost estimate for the build, and the question list for the lawyer. A working prototype on a test network with one integration is the standard tier at €12,500 and was not part of this work. The review is covered by our 100% money-back guarantee: full refund on request within 14 days of delivery. Nothing in it is legal or tax advice.

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