Owners of securities will no longer have to document their transactions on paper. The law is part of a government initiative that will expand the use of blockchains in the country
A recent effort to change financial laws in Germany shows that its government is interested in making the country one of the world leaders in blockchain network regulation. This is demonstrated with the latest law the cabinet of Chancellor, that Angela Merkel approved, claiming the use of securities that show registration on blockchain to be legal throughout the territory.
The new legislation received the acceptance of ministers on Wednesday, December 16, as part of an even broader strategy to incorporate blockchain networks into the German financial market. In this way, electronic securities will now be active in Germany and play the role of substitutes for paper documents and other certificates.
The measure not only encompasses blockchain since it mainly focuses on making the regulations that oblige issuers and owners of these securities to document all their transactions on paper.
At present, financial titles can get registration with an entry in the Central Securities Depository (known as Clearstream) in a bank registry or a blockchain, such as Bitcoin or Ethereum.
Because the law does not clarify which specific blockchain is going to be used, there is a potential possibility that they will choose the private networks that dedicate efforts to the issuance of securities. The law, in general, would center its functions on recognizing cryptographic securities as legal assets.
Christine Lambrecht, Minister of Justice, assured that the law will provide greater legal clarity for financial technologies and will improve the potential of these new tools.
Olaf Scholz, finance minister, noted that the use of electronic securities could be useful to reduce administrative burdens and costs for both public and private companies in Germany. Likewise, there is information about the government being interested in blockchain to decentralize the registry of securities in the country; in this way the government can allow the incorporation of new commercial authors and preventing the Central Deposit of Property Values of the Country from being the only authority to dedicate itself to the registry of these goods.
The bill had been in the works since mid-August this year when the German authorities raised the possibility of supporting the development of blockchain and decentralized finance (DeFi) in the national territory.
The addition of new registries could create a wider expansion of the German financial market, as well as better control of its distributions. It has even been under speculation the interest of authorities about the functioning of the decentralized finance (DeFi) which has gained a lot of popularity in recent years, a curiosity shared with regulators such as the CFTC in the United States that is also looking for ways and creating paths to incorporate these services in the national market and regulate them.
By: Jenson Nuñez.
