Germany Releases Public Paper on Blockchain Securities Regulation

By Warren Hayes | March 11, 2019

Germany is making its moves towards developing a regulatory approach to blockchain. Its Federal Ministry of Finance (or BMF for short in German) has released a key issues paper on the proposed treatment and regulation of blockchain-based securities, which is open to industry stakeholders for feedback.

In its announcement (Mar 8), BMF said relevant associations and industry professionals have until April 12 to send any comment on the paper. The paper discusses the key points related to the introduction of electronic securities and the regulation of the public offering of certain crypto tokens.

Before a bill is to be drafted, BMF said that the Federal Ministry of Justice and Consumer Protection and itself should jointly form a comprehensive picture of measures outlined in the paper. The measures are reportedly aimed at strengthening Germany’s position as a leading fintech country.

Specifically, BMF said it believes that German law should “generally be opened up” for electronic securities, and their issuance should be “technology-neutral, i.e. the issue of electronic securities should also be possible on blockchain/distributed ledger technology (DLT).”

As for crypto tokens, these are generally not seen as securities or other instruments under the Securities Trading Act. Hence, BMF said their issuance will not be subject to existing capital market regulations. However, because investing in crypto tokens is viewed as risky for investors, the regulation of the public offer of such tokens is up for discussion in the key issues paper.

The German Cabinet has revealed that the country’s blockchain strategy is targeted for introduction by summer this year. Around the same time as BMF’s released issues paper, Germany also separately proposed the setting up of a state register to help regulate the sector and protect investors. Last month, The Crypto Sight noted that Germany was consulting industry experts on its proposed national blockchain strategy.

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