The German financial regulators are planning to modernize the country’s securities with blockchain technology. Regulators introduced a draft bill on blockchain-based digital securities.
August 13, 2020 | AtoZ Markets – Germany’s Federal Ministry of Finance (BMF) and the Federal Ministry of Justice and Consumer Protection (BMJV) introduced a draft bill on blockchain-based digital securities earlier this week. Regulators are looking to modernize the country’s securities with blockchain technology.
According to the official statement, the authorities outline that the adoption of digital securities is one of the core aspects of the federal government’s blockchain strategy. The current legislation in Germany requires financial instruments that are classified as securities to be secured in a document.
The proposed draft bill improves regulatory clarity in Germany
Blockchain technology would thus help guarantee liquidity and compliance by providing a replacement for the paper certificate, the BMF, and BMJV said. According to German authorities, the proposed draft bill also improves regulatory clarity, stipulating that the Federal Financial Supervisory Authority will act as a major regulator in blockchain-based e-stocks.
The Federal Financial Supervisory Authority, BaFin will be responsible for monitoring the issuance of digitized securities. The official statement also notes that BaFin is responsible for the maintenance of decentralized ledgers under the German Banking Act.
Blockchain adoption increases amid Covid-19 pandemic
Amid the ongoing covid-19 pandemic, the regulators across the world are looking for safer ways to allow businesses to work that does not require human to human contact. The blockchain technology that underpins most cryptocurrencies has proven beneficial in such cases. For example, blockchain technology eliminates the need for paperwork. Earlier, the US Senate proposed blockchain voting during the lockdown. The proposed bill sought a blockchain-based distribution of medical equipment.
Central banks around the world are also working on CBDCs. Regulators around the world have acknowledged the potential of blockchain technology. Later last year, Chinese President Xi Jinping said that China should take the lead in blockchain technology.
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