Germany has passed a new law legalizing the use of blockchain technology in the securities sector. The law exempts rules requiring the use of paper certificates for all securities transactions.
According to a Reuters report, German lawmakers approved the new law as part of a broader blockchain adoption strategy. This will now be replaced by a simple entry in the central securities depository that the bank can maintain. Alternatively, issuers and holders can document their securities on blockchain-based registers.
Pushing the digitization of the German financial center with electronic securities
While legalizing the use of blockchain technology in the securities sector, Finance Minister Olaf Scholz stated that they are pushing for the digitization of the German financial center with electronic securities. “Paper certificates may be valuable to some for nostalgic reasons, but the future belongs to the electronic version,” he added.
He further noted that electronic securities could allow the industry to cut administrative burdens and other related costs. Her Justice Ministry colleague Christine Lambrecht said the law would offer legal clarity to the securities industry, thereby increasing the potential of emerging technologies such as blockchain.
Digitization of financial markets will be accelerated by blockchain
Christine Lambrecht stated, “The digitalization of financial markets is very advanced, and it will be accelerated even further through the use of technologies such as blockchain.” “Today’s cabinet decision significantly expands the innovative potential of this technology for Germany’s financial centre.
At the same time, we are creating legal certainty in a region characterized by continuous change through technological innovation,” he added. The Finance Ministry introduced the bill earlier this year, claiming it would protect the integrity, functionality and transparency of the German stock market.