Finst

Blockchain Stocks: Germany Dares to Take the Next Step

A new draft bill for the Ministry of Finance and Justice's future financing law hints that electronic shares could be coming.

By Luc Vesters
• 4 min read
Blockchain Stocks: Germany Dares to Take the Next Step

A new draft bill for the Ministry of Finance and Justice's future financing law suggests that electronic shares could be issued in the future. How likely is it that shares on Ethereum, Polygon, and others will be issued, and what major ideas are still missing from the law?

So far, Germany only allows electronic issuance of bonds. While Siemens, for example, is issuing a bond on the Polygon blockchain, Siemens’ shares cannot be recorded electronically. For share capital, physical documents are still required. That’s why the Electronic Securities Act (eWpG), which has existed since June 2021, needs to be updated for shares.

The Future Financing Law

To bring Germany’s financial sector, and especially existing financing forms, into the digital age, the Ministry of Finance and Justice launched the Future Financing Law initiative. Besides digitalization, there are also core goals like better employee participation to boost start-ups and SMEs, pushed by the Ministry of Lindner.

The most exciting change for the blockchain sector under the Future Financing Law is the Electronic Securities Act, which, according to the draft BTC-ECHO has, envisions fully tokenized shares. This would be a whole new asset class on Ethereum, Polygon, and others.

Shares on Ethereum, Polygon, and Co.

So far, the biggest group in Germany has been crypto-securities or security tokens, which could be expanded into bonds with equity-like features such as participation rights. This allowed bondholders to participate in exit proceeds or profit distributions.

With electronic shares, a separate class of securities with very clear rules and investor rights becomes accessible to companies and investors. Whether a share corporation will issue its shares on the blockchain or via a traditional securities certificate in the future is up to choice. In the end, there will be two parallel

Disclaimer: This content is for informational purposes only and does not constitute financial, investment, legal, or tax advice. The information provided may be incomplete, inaccurate, or outdated and should not be relied upon as such. Nothing on this website should be considered a recommendation to buy, sell, or hold any cryptocurrency. Investing in crypto-assets involves risk of loss.