German Federal Government presents draft bill to introduce electronic bonds

The German Federal Government has proposed a bill that enables electronic bonds to be issued without a certificate.

The plan offers the possibility of being able to issue bonds purely electronically, as well as of smaller shares. Technology neutrality should allow for flexibility, thus excluding any preference for blockchain systems over other types of electronic issuance.

The proposed legislation eliminates the need for a securities certificate, which will be replaced by an entry in a securities registry. It will be guaranteed that owners with electronic bonds have the same property rights as they would with securities certificates.

According to the German Federal Government, there is no need to wait for an EU-wide agreement, particularly because other EU Member States have already issued regulations on the use of blockchain technology for financial instruments.

The plan to introduce electronic bonds is part of Germany’s blockchain strategy adopted in September 2019. By implementing the EU Money Laundering Directive, Germany has also included cryptocurrency in the list of controlled financial instruments. The existing regulatory provisions for other financial instruments also apply to crypto tokens