The German authorities have presented a new e-Stocks Bill focused on modernization of securities regulation law.
It is expected that with the introduction of digital securities, one of the central components of the federal government's blockchain strategy and a joint document by the Federal Ministry of Finance and the Federal Ministry of Justice and Consumer Protection on key issues of 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 the document. The paper certificate is the contact person for the transfer in accordance with the property laws and, among other things, contains: a traffic protection account for potential buyers.
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In order to guarantee the liquidity of the securities and a legally secure acquisition, an appropriate replacement of the paper certificate is required, for example, by entry into the register based on the blockchain technology.
Bundesverband Alternative Investments eV Managing Director Frank Dornseifer says the draft combines "future-oriented technology with the long-standing legal and regulatory framework for securities."
This proposed regulation also provides regulatory clarity: the Federal Financial Supervisory Authority (BaFin) will oversee the issuance and maintenance of decentralized ledgers as new financial services in accordance with the rules of the eWpG and the German Banking Act Kreditwesengesetzand.
The draft also distinguishes between the maintenance of a central electronic register of securities by the central securities depository and the maintenance of registers for the issuance of electronic bonds, which is made possible, inter alia, by distributed ledger technologies.
Adapting the legal framework to new technologies, especially blockchain technology, serves to strengthen Germany as a place of doing business and increase transparency, market integrity and investor protection, the regulator added.
In September 2019, Angela Merkel's government passed a law aimed at preventing private currencies like Libra from becoming an alternative to national currencies.
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