- The new stock will allow converting old stocks into the digital ones.
- The proposed draft is set to combine technology with the legal and regulatory framework for securities.
- The main focus of this new law will be on electronic deposits as per the Electronic Security Act.
The German ministry introduced a new draft law for e-stocks, which will be mainly focused on the modernization of securities regulation law.
The Ministry feels that in line of the capital market laws it was necessary to develop and offer such unique solutions to the individuals. It further added that the necessity for such government bonds was to ensure that paper endorsement will soon no longer apply in Germany.
Blockchain Technology combined with the Legal Framework
At present, financial instruments classified as securities under civil law must be converted into securities in a document. The paper certificate will be the contact point for such transferable facts under the property law, and the traffic protection of potential buyers will also be taken into account. Entry in a register-based on blockchain technology will ensure the marketability of the securities and legal companies. This will also replace the paper-based note into e-securities by a directed substance.
The Federal Finance Ministry commented, “The adaptation of blockchain in the legal framework will strengthen Germany by increasing transparency and grow as a business location bringing market integrity and investor protection.” The register can be protected under a CDS permit and will be a focal register with the focal protection depositary.
The bill will also allow converting old stocks into a tokenized structure and vice versa. This can be done with a permit from the controller, BaFin, to give stocks with an initial capital of 730,000 euros. BaFin or the Federal Financial Supervisory Authority will be able to issue and maintain decentralized ledgers as new financial services compliance with the rules of the eWpG and The German Banking Act Kreditwesengesetzand.
Frank Dornseifer, Managing Director of Bundesverband Alternative Investment (BAI) commented, “Details may need to be further clarified, but the new consultation process always aims to do the same”
With the introduction of the said draft bill, it can become the principal law opening paths for the financial exchange digitization, which will be administered entirely and managed. This will make Germany a tech ward and give tokens a real responsibility for real organizations.