The German Federal Ministry of Finance has recently released the draft law that serves to modernize German securities law and the associated supervisory law. The central component is the introduction of the new law on digital securities eWpG . With the establishment of digital securities, one of the central components of the Federal Government’s blockchain strategy and the joint key issues paper of the BMF and the BMJV on electronic securities will be implemented.
According to the current legal situation, financial instruments that are classified as securities under civil law must be securitized in a document. The paper certificate is the point of contact for the transfer facts under property law and, among other things, takes into account the traffic protection of potential buyers. To ensure the marketability of securities and legal compliancy however, it requires a suitable replacement of the paper document, for example, by entry in a register based on the block chain technology.
This proposed regulation also creates regulatory clarity: The Federal Financial Supervisory Authority will monitor the issuance and the maintenance of decentralized registers as new financial services under the eWpG , the KWG and the central securities depository regulation. The draft differentiates between the maintenance of a central electronic securities register by a central securities depository and the maintenance of registers for issuing electronic bonds made possible by distributed ledger technologies, among other things .
Adapting the legal framework to new technologies, especially blockchain technology, serves to strengthen Germany as a business location and increase transparency, market integrity and investor protection.