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29 March 2019

Key-issues paper on the regulatory treatment of electronic securities and crypto tokens

The Federal Ministry of Finance and the Federal Ministry of Justice and Consumer Protection have jointly published a key-issues paper discussing the possible introduction of electronic securities and the regulation of public offers of certain crypto tokens. The paper forms part of efforts to strengthen Germany’s role as one of the world’s leading digital technology and fintech locations.

Technological binary code with zero and one enlarge image
Source:  Adobe Stock / Julian –

In its coalition agreement of 12 March 2018, the German government set out plans to strengthen Germany’s role as one of the world’s leading digital technology and fintech locations and develop a blockchain strategy. The key-issues paper that has now been produced will contribute to achieving these goals. The paper deals with the possibility of introducing electronic securities and regulating the issuance of crypto tokens.

Introduction of electronic debt securities

German legislation will be opened up to electronic securities. In other words, the current rule whereby securities must be represented by physical certificates in paper form will no longer apply across the board. Regulation of electronic securities will be technologically neutral, meaning that it will be possible to issue electronic securities on blockchain or distributed ledger technologies (DLT). To begin with, the change will be restricted to electronic debt securities. The introduction of electronic shares will not be addressed at this point in time, as the regulatory effort involved would make it impossible to introduce electronic securities in a timely manner.

Regulation of Initial Coin Offerings

In recent years, large numbers of crypto tokens have been issued through Initial Coin Offerings (ICOs). As a rule, these crypto tokens do not constitute securities, capital investments or other financial instruments as defined in the Securities Trading Act ( Wertpapierhandelsgesetz ). This means that, in contrast to the future issuance of electronic securities, the issuance of such tokens is not subject to existing capital market rules. Nevertheless, crypto tokens pose certain risks for investors. Against this background, the key-issues paper addresses the possibility of regulating public offers of such tokens.

The consultation paper does not address the need for national rules to prevent money laundering in connection with crypto tokens of all kinds on the basis of the Directive amending the Fourth EU Anti-Money Laundering Directive (EU) 2018/843 of 30 May 2018. That matter is dealt with separately in the legislation implementing the Anti-Money Laundering Directive.

The Federal Ministry of Justice and Consumer Protection and the Federal Ministry of Finance want to comprehensively assess the measures set out in the key-issues paper. Based on the results, they plan to produce a ministry draft of a law.

Associations and specialist groups can submit written statements via e-mail to and by Friday, 12 April 2019.

By government decision, statements on legislative processes that are submitted by associations and specialist groups are published online. Statements should not contain any personal data. Personal data can be included in annexes; alternatively, any personal data contained can be redacted from the statement. If the statement does contain personal data, proof that the individuals concerned have consented to its publication should also be attached. Associations and specialist groups that object to such publication should make this clear when submitting their statement. In this case, we will merely publish a note stating that the association in question submitted a statement.