Germany Wants To Recognize, Regulate Blockchain Securities

Germany, through its Ministry of Finance, is looking to make a bold move in the blockchain realm. Basically, it wants to recognize all blockchain-based securities and considers them as a legitimate form of financial instrument. And with such recognition, the government arm believes it is about time the country regulate them as such.

Being Open To Electronic Securities

According to the official report, the agency claimed that securities are capable of being issued in electronic form and, thus, should not be documented solely on paper. The idea from the agency was published in detail via an official paper, further suggesting that German law must be opened when it comes to electronic securities. This would mean not applying any restriction to the current mandatory documentary embodiment of securities, which are in paper form.

The ministry added that legislation must be able to create a certain framework designed specifically to regulate all digital instruments. But unlike the norm, this one should have flexibility in adjusting the rules and workable enough to adapt to the changing reality that blockchain technology is known for.

Considering the fact that technical standards and/or requirements tend to change in rapid succession, it only makes sense for authorization to be provided in order to regulate certain technical details. The Ministry of Finance is confident that this can process can work through legal regulation.

Using A Single Central Registry

By essence, the initiative must first start with electronic bonds. From there, it should move to digital shares. The government agency added this process is essential simply due to the fact that the amount of regulation needed in digital shares plays an important role. In a nutshell, it has the ability to delay the timely introduction of these electronic securities.

The ministry proposes the idea of registering all the aforementioned securities in the country. The process, in particular, must be done via a single central registry, one that is solely administered by a government-supervised department in the country. Otherwise, manipulation in the process could exist, which, in turn, defeats the purpose of regulating blockchain securities.

It is worth noting that, according to the agency’s paper, digital securities are allowed to use blockchain. However, they do not necessarily have to see it as a privilege. The paper also discussed the topic of utility tokens, contemplating the possibility of exempting them from requirements placed directly on securities issuers. As a rule, the agency believes that utility tokens do not have to constitute investments, securities, or any other financial instruments.