Germany has passed a new law that legalizes the use of blockchain technology in the securities sector. The law relieves a rule that required the use of paper certificates for all securities transactions. According to the Reuters report, German lawmakers approved the new law as part of its wider blockchain adoption strategy. This will now be replaced by a simple entry in a central securities depository that a bank can maintain. Alternatively, issuers and holders can document their securities on a blockchain-based register.
“Driving the digitization of Germany’s financial center with electronic securities.”
While legalizing the use of blockchain technology in the securities sector, Finance Minister Olaf Scholz stated that they are driving the digitization of Germany’s financial center with electronic securities. “The paper certificate may be dear to some for nostalgic reasons, but the future belongs to its electronic version,” he added. He further noted that electronic securities could allow the industries to cut administrative burdens and other associated costs. His Justice Ministry colleague Christine Lambrecht said the law would offer legal clarity for the securities industry, thus enhancing the potential of emerging technologies like blockchain.
The digitization of the financial market will be accelerated with blockchain.
Christine Lambrecht stated, “The digitization of the financial market is already well advanced, and it will be accelerated even further through the use of technologies like blockchain.” “Today’s cabinet decision significantly expands the innovative potential of these technologies for the German financial center. At the same time, we create legal certainty in an area that is characterized by constant change through technological innovations,” she added. The Finance Ministry introduced the bill earlier this year, claiming it would protect the German stock market’s integrity, functionality, and transparency.
