The German government has passed new legislation to introduce all-electronic securities as part of the country’s wider blockchain strategy. According to the country’s finance ministry, the new law relaxes rules forcing issuers and holders of securities to document transactions with a paper certificate.
Legal Clarity
According to a report, the paper certificate can now be “replaced with an entry in a central securities depository or a register kept by private-sector banks.” The report also speculates that this means “an entry in a crypto securities register based on blockchain technology is now also possible.” German government officials say the law would provide legal clarity and enhance the potential of the new technologies.
Lauding the new law is Germany’s Finance Minister Olaf Scholz who points to the cost-effectiveness of electronic securities over traditional paper-based securities. Scholz also explains the importance of moving with the times saying:
The paper certificate may be dear to some for nostalgic reasons, but the future belongs to its electronic version.
Meanwhile, echoing Scholz’s sentiments is the country’s Justice Minister Christine Lambrecht. The cabinet member expresses confidence that digitization of the financial market will accelerate through the use of the blockchain. She adds that the passing of the legislation significantly “expands the innovative potential of these technologies for the German financial centre.”
Cautious Approach
In the meantime, another report says Germany’s staged approach towards electronic securities appears cautious yet it “also seems to go further than other European countries that already allow electronic securities.” For instance, while France has for two years allowed the blockchain-based trading of securities this however is only applicable to “non-listed securities that do not use existing securities settlement systems.”
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