Germany Allows Electronic Securities Records On Blockchain
The Berlin Cabinet recently passed a new law that allows blockchain technology to be utilized for recording all-electronic securities.
The law is considered part of the broader blockchain strategy of Germany, which has been very vocal about blockchain technology. With the new law, it will ease the burden security holders and issuers face when recording transactions with a paper certificate.
Finance Minister Olaf Scholz pointed out that although the paper certificate may be relevant in some instances, the transition to its electronics version is the right direction for the future.
According to him, “electronic securities cut costs and administrative burdens.”
In the past, security holders need to record their transactions using a paper certificate, which generates administrative burdens to the security holders. But, based on the report, the electronic system will eliminate these burdens and provide even greater benefits.
The law now allows the replacement of paper certificates with entry into the central securities depository.
It’s also possible to use blockchain technology to enter or register the crypto securities, as the German lawmakers have already passed the law for such.
Blockchain Offers Better Transparency
Justice Minister Christine Lambrecht also pointed out that the new law offers legal clarity and improves the likelihood of emerging technologies to flourish.
According to her, blockchain technology will offer a more secure and faster platform to record transactions. Another potential benefit is the ability to have a high level of transparency.
The technology also does not give room for forgery, which can be seen with the paper transaction recording method. As each user has a copy of the database, it’s practically impossible to manipulate the data without getting caught, Lambrecht stated.
According to the head of IT at Bitkom Achim Berg, blockchain technology has a huge potential. It can fundamentally change the way the entire business sector works.
Last year, Scholz recommended that Germany should support blockchain-based securities as a legal form of financial instruments, but it should also put a proper regulatory framework in place.
Berlin – Europe’s Crypto Capital
Several blockchain start-ups are already in Berlin, regarded as Europe’s crypto capital. The city has a favorable regulatory and infrastructural platform for cryptocurrency and blockchain.
But most especially, companies within the blockchain industry have found that Berlin is an ideal location to grow in the industry, as many of them are already operating and conducting research there.
Many of them are also working on blockchain-based projects for safe registration possibilities, creation of digital identity, smart contracting as well as safe and accelerated dispatch.
Also, several Berlin-based blockchain startups are being financed by investors all over the world. Some of the startups have concluded their initial coin offering using blockchain technology.
With the open-mindedness of the Berlin crypto ecosystem, lots of boutiques, retailers, bars and restaurants have started accepting cryptocurrency as a means of payment. And with the passage of the new law, the government has even provided more use cases for blockchain technology, which will encourage more startups to dive deeper into the technology.