Digital Securities — A Step into the Future
On 05.05.2021, the Finance Committee of the German parliament, chaired by Katja Hessel (FDP), announced its plans to introduce digital securities. With the new law, the legislator aims to make Germany fit for the future. The eWpG is intended to make emissions more cost-effective and innovative.
„With the establishment of digital securities, one of the central building blocks of the German government’s blockchain strategy is being implemented,” explained Sarah Ryglewski, State Secretary at the German Federal Ministry of Finance.
Investors will soon have access to a new form of digital investment:
In the future, bonds and fund units can be issued on a purely digital basis. So-called crypto funds based on decentralized blockchain technology are to follow by the end of the year.
The German legislator hereby follows the example of France and Luxembourg, on the way to dematerializing securities law.
The bill, which was approved by CDU/CSU, SPD and FDP, is revolutionizing the issuance of securities, by making it possible for certificates to be issued digitally. Until now, it was only possible to issue securities with physical certificates. The new law provides for two types of electronic securities registries: centralized securities registries and decentralized crypto securities registries, typically based on distributed ledger technology (DLT). The register of a central securities registry can only be a securities depository or a custodian bank designated by the issuer. In contrast, the registrars of decentralized crypto securities registries require a license as a financial services institution. In the interest of investor protection, the crypto securities register must be maintained on a tamper-proof recording system in which data is logged in time sequence and stored in a manner protected against unauthorized deletion and subsequent modification.
The explicit mention of the Blockchain-Technology in the new law shows that the legislator has recognized its relevance for the further economic development of Germany.