The German government has passed new legislation to introduce all-electronic securities as part of the country’s broader blockchain strategy. According to the country’s finance ministry, the new law relaxes rules that require 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 store or a register held 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 .
Breaking the new law is German Finance Minister Olaf Scholz, who highlights the cost-effectiveness of electronic guarantees over traditional paper guarantees. Scholz also explains the importance of moving with the times by saying:
The paper certificate may be dear to some for nostalgic reasons, but its future belongs to its electronic version.
Meanwhile, Scholz’s sentiments echo the country’s Justice Minister Christine Lambrecht. The cabinet member expresses confidence that the digitalization of the financial market will accelerate through the use of the blockchain. He added that passing the legislation significantly “expands the innovative potential of these technologies for the German financial center.”
A cautious approach
Meanwhile, another report says that Germany’s staged approach to electronic securities seems cautious but that it “also seems to go further than other European countries that already allow electronic guarantees.” For example, while France has for two years allowed blockchain-based securities trading, this only applies to “unlisted securities that do not use existing securities settlement systems.”
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