Germany’s cabinet has approved legislation that authorizes the use of blockchain technology in transacting securities.
The law relaxes requirements that all transactions be recorded on paper, according to the German Ministry of Finance.
“The paper form is replaced by an entry either in a register kept by a central securities depository or a custodian bank (central register security paper) or in decentralized, so-called crypto securities register based on blockchain technology (crypto securities).”
Per the German Justice and Consumer Protection Minister Christine Lambrecht, the legislation will “create legal certainty in an area that is characterized by constant change.”
The new law now makes the issuance of securities purely electronically a possibility. According to the German Finance Minister Olaf Scholz, the transition to purely-electronic securities will drive efficiency.
“Electronic securities reduce costs and administrative work. The bill brings an important digital innovation to the German capital market[s].”
The law will also make Germany attractive as an investment destination, according to the country’s Ministry of Finance.
“The adjustment of the existing legal framework for securities to innovative technologies, in particular blockchain technology, serves to strengthen Germany as a business location and increase transparency, market integrity and investor protection.”
German’s Ministry of Finance further notes that the legislation, which was introduced as a bill on August 11th, 2020, will bring the government’s blockchain strategy closer to fulfillment.