Unternehmensberatung Wertpapiergeschäft

Draft Law on Electronic Securities (eWpG)


An important boost for blockchain and the tokenization of securities

In recent years, digitalization topics and blockchain applications have increasingly become the focus of banks and fintechs. Along with technological progress, applications in the area of tokenization are becoming increasingly important.

Startups from the financial and real estate sectors play a significant role in this context by addressing the distribution, registration, and custody of token-based securities. Besides, other companies are increasingly involved in the infrastructure for decentralized blockchain applications and the offering of asset tokenization.

However, the market is currently dominated by startups that drive the progress and adoption of tokenization. Major financial institutions are still hesitant in this respect. One reason for this is that regulation is still lacking. With the current draft Electronic Securities Act, the situation could be significantly improved for the German market. The draft law is expected to come into force at the end of 2021 and enables the issuing of electronic securities (bearer bonds). The legal framework for electronic securities is explicitly intended to promote new technologies such as blockchain technology or distributed ledger technology. In this context, the draft law differentiates between electronic securities and crypto securities. Therefore, the draft law aims to be technology neutral and not unilaterally favor issues based on blockchain technology.

To address the problem of a lack of standards within tokenization, the International Token Standardization Association (ITSA), among others, has been formed. ITSA is a non-profit organization and interest group that aims to develop and implement comprehensive market standards to identify, classify, and analyze cryptographic tokens.