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The announcement reveals that the regulations are created to be “technology-neutral” in case of future technological developments.
In a newly-approved law, the Federal Cabinet has approved the introduction of electronic securities in Germany. The drafted law was presented by the Federal Ministry of Finance and the Federal Ministry of Justice and Consumer Protection.
On the 16th of December, the German Cabinet under the leadership of Chancellor Angela Merkel passed the new legislation. Now, the law has legalized electronic securities on blockchain technology. With the implementation of the new law, issuers and holders of securities will no longer have to deal with paper certificates.
The federal minister of finance Olaf Scholz said:
“With electronic securities, we are driving the digitization of Germany’s financial center. The paper certificate may be dear to some for nostalgic reasons, but the future belongs to its electric version.”
Scholz further said that the introduction of electronic securities would reduce the expenses dedicated to paper certificates. Also, the new all-electronic securities will minimize administrative work. He added that the new bill represents a significant development and innovation to the capital market in Germany.
More on Electronic Securities Legislation in Germany
With the new bill, an entry kept by a central securities depository or a bank would be replacing the paper certificates. Also, the paper form may be replaced by an entry in a decentralized blockchain-based register.
According to an announcement, the newly-passed bill on digital securities will satisfy one of the federal government’s blockchain technology strategy requirements. The announcement noted:
“The adaptation of the existing legal framework for securities to innovate technologies, in particular blockchain technology, serves to strengthen Germany as a business location and increase transparency, market integrity and investor protection.”
The announcement also added that the regulations are created to be “technology-neutral” in case of future technological developments. Revealing further, the announcement said that the issuance of securities purely electronically should be feasible in the future.
Germany Expand Digital Financial Market Using Blockchain
The federal minister of justice Christine Lambrecht also commented on the newly legalized electronic securities on the blockchain technology in Germany. Lambrecht noted that a digital environment for the financial market in Germany is already established. She added that there are more ongoing efforts to further accelerate the digital financial market using blockchain technology. Lambrecht said that the new law on electronic securities had accelerated the potential of technology for the German financial center.
Before now, the German Ministry of Finance recommended that securities be in electronic form and not documented on paper. At the time, the ministry added that the paper documented securities should no longer apply without restriction. According to a CoinDesk report, the ministry of finance said that there should be a separate law for acquiring and transferring electronic securities in Germany.