Germany seeks to remain at the forefront of blockchain innovation
The Federal Department of Justice and The Department of Consumer Protection (BMJV) and the Department of Treasury have announced the publication of a draft law to promote blockchain technology. The draft law provides for the introduction of electronic securities. The Federal government has therefore taken an important step forward in its blockchain strategy. As stated in the official statement, the Federal Ministry of Justice and Consumer Protection (BMJV) has put forward a proposal to digitize securities using blockchain. The law aims to clarify more clearly the role of regulators in the blockchain-driven industry.
The current German law requires that
securities be securitized in a document. Once this is achieved, a certificate
of value is issued that functions as a contact point for transferable facts
under the German property law. In this way, the law ensures that there is
“traffic protection” for potential buyers of the security.
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.
By introducing a new blockchain-based
mechanism for securitization of securities, the German authorities seek to
“guarantee the marketability” of financial assets. In addition, the law will
ensure compliance in a more effective manner.
The proposal will also create greater
clarity on the role of the Federal Financial Supervisory Authority. According
to the proposal, the regulator will be in charge of “monitoring the issuance
and maintaining the decentralization” of the registration of securities as a
new financial service, in accordance with the banking law and the regulation of
the central securities depository.
Another important classification was set
out in the announcement. The law will make a distinction, for the benefit of
consumers, between keeping electronic security registered by a central
depository and keeping of registers for the issuance of electronic bonds.
German regulators are concerned about the
advancements that other countries have made with respect to legislation,
regulation and implementation of blockchain technology for issuing electronic
securities. In this regard, Germany seeks to maintain its attractiveness as a
financial center. German authorities emphasize that their main objective is to
modernize the existing securities law. In this way, it will be possible to
protect the functioning of the financial markets within the country.
As a result, the authorities expect an
improvement in the conditions for innovation in the financial sector. The
German Ministry of Finance concludes with the following:
The adaptation of the legal framework to
new technologies, especially blockchain technology, serves to strengthen
Germany as a business location and to increase transparency, market integrity
and investor protection.
Author : Reynaldo