The finance ministry of Germany, Federal Ministry of Finance (BMF), released a draft bill on the introduction of electronic securities (eWpG) on Tuesday, and it includes a blockchain solution to digitize securities.
The bill would revamp both the German securities law and the corresponding supervisory law with a focus on blockchain strategy, according to a press release published by BMF.
“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 Federal Ministry of Justice and Consumer Protection (BMJV) on electronic securities (eWpG) will be implemented,” the release said.
Currently, the law dictates that financial instruments classified as securities under civil law “must be securitized in a document.” This document, a paper certificate, currently acts as the source of all facts relating to each security and incorporates details on buyers’ accounts, according to the report.
However, a replacement for these paper certificates is needed to ensure a more secure and easily marketable alternative, according to the release. One way to achieve this is by entering details regarding these securities on a blockchain-based register, the release read.
Further, the draft bill also provides greater regulatory clarity — The Federal Financial Supervisory Authority will track the launch and upkeep of “decentralized registers” as new financial services in agreement with the eWpG, the German Banking Act Kreditwesengesetz (KWG) and the key securities depository rule.
“The draft differentiates between the keeping of a central electronic securities register by a central securities depository and the keeping of registers for issuing electronic bonds made possible by distributed ledger technologies, among other things,” the release read.
The proposed changes to the legal framework by adopting blockchain and other new technology aims to bolster Germany as a hub of business and magnify “transparency, market integrity, and investor protection,” according to the release.
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German Finance Ministry proposes blockchain-based solution to digitize securities in draft bill written by Momina Khan @ https://www.theblockcrypto.com/linked/74839/german-finance-ministry-proposes-blockchain-based-solution-to-digitize-securities-in-draft-bill?utm_source=rss&utm_medium=rss August 13, 2020 Momina Khan