Blockchain has gradually become an integral part of the financial sphere all around the globe. However, it still requires extreme security and more participation. Germany’s Federal Ministry of Finance (BAFIN) has issued a paper that discusses blockchain security regulations. The paper has come in the wake of a statement released last month by the Cabinet of Germany about the introduction of a blockchain strategy (probably by mid-2019).
The regulator briefly mentioned the key points related to electronic securities and crypto tokens in the paper.
What Does the Paper Say?
The document states that the regulation of electronic securities can be based on blockchain or distributed ledger technology (DLT). To put it simply, it should be technology neutral.
We know that crypto tokens do not represent financial instruments like securities and investments (according to Securities Trading Act). Thus, it won’t be subjected to existing market regulations. Nevertheless, there is an opportunity for regulating Initial Coin Offerings (ICOs), as the paper leaves it for debate.
It also states that the Federal Ministry of Justice and Consumer Protection and the Ministry of Finance should strategize a comprehensive picture of the measures highlighted in the paper before proposing a drafting bill on the subject.
Blockchain Strategy to be introduced by Mid-2019
The Cabinet of Germany reported that before introducing the blockchain strategy, they would undergo an online consultation process. Hoping that other relevant ministries will contribute, the Ministry of Economic Affairs and Energy along with the Ministry of Finance is already preparing a strategy.
Making Blockchain Available and Easy
To boost the use of blockchain, Germany’s Justice and Finance ministry has proposed to launch a state-run register to protect investors from fraud and other possible crimes and regulate the sector. The guidelines also suggest easing the existing requirements, i.e., financial instruments must have tangible counterparts that investors can purchase.