As more and more states within Europe adopt a legal framework for digital securities (like Malta and other EU states), Germany is facing increasing institutional pressures to do the same. Reports are out daily on a growing number of digital securities which are coming into the fore in Germany within the past year. Yet, the country still lacks a concrete framework on how to legally deal with the security token question.
The German Ministry of Finance is well-aware of this problem which is why they have just published a report arguing for “electronic securities.” These initiatives, according to the report, should start with digital bonds and move on to digital shares.
The report issued by the ministry makes the case for a “single central registry” which would be government-supervised. This would avoid the “possibilities of manipulation,” the document reads.
Most notably, however, is the report’s explicit reference to blockchain technology. In it, the report acknowledges blockchain’s precedence in the realm of digital securities, but makes clear that “the use of blockchain technology should not be privileged.”
The ministry also made clear that “utility tokens do not [currently] count as digital securities,” and many of them may be exempt from the requirements made by existing securities law.
Analysts have taken from this report that STO-related legislation in Germany is certainly in the works. Senator Thomas Heilmann, a member of the Christian Democratic Union (CDU) and the largest political party in Germany, said that most people still don’t understand tokenized securities. The bill is still in “discussion materials,” but Heilmann said a more formalized bill on digital securities is in the works.
With Germany being the center of finance within Europe, security token legislation would likely send ripples throughout Europe as more states would adopt a similar legislative framework.