Bundestag passes eWpG and clears the way for digital securities

The Bundestag will pass the long-awaited eWpG today. In addition to praise, there is also criticism from politics and business.

After much back and forth, the “Law on the Introduction of Electronic Securities” (eWpG) is passed today. The finance committee in the Bundestag gave the green light yesterday. Today’s decision in the Bundestag is therefore only a matter of form. There was no debate about it. The law now clears the way for digitized securities. Up until now, a physical certificate was always required for each security. This is now partially abolished.

In a first step, the eWpG is intended to enable the electronic issuance of bonds and, to a lesser extent, share certificates. In addition, the law expands the existing central register to include a crypto securities register that applies to blockchain-based financial products. An electronic security can only be listed in one of the two directories at the same time. In future, issuers will thus be able to decide whether they want to digitize securities and thus dispense with a certificate.

The eWpG is a central component of the federal government’s blockchain strategy. A forerunner was already decided in mid-December last year. At that time there was praise from the Blockchain Federal Association. However, criticism came from the opposition. The FDP parliamentary group criticized the lack of inclusion of digital shares and called for corrections to the eWpG. The result: an amendment by the coalition factions, which now also includes crypto fund shares in the law by ordinance.

FDP criticism: eWpG is “a very small number”

The Bundestag Finance Committee has now approved that amendment. This time too, the reactions are mixed. The digital association Bitkom praises the law as a “milestone”. The FDP remains unimpressed. The Liberal MP, Frank Schäffler, considers the inclusion of crypto fund shares to be correct. The disregard of digital stocks, however, still bothered him. He said to BTC-ECHO:

The law is a very small number. For example, stocks are still not taken into account. After three years of announcement, that is not enough. Almost nothing of the blockchain strategy was implemented. This means that Germany does not even catch up with our neighboring countries.

FDP member of the Bundestag Frank Schäffler opposite BTC-ECHO

Centrality of the crypto securities register is a deficit

The founder of the FinTech law firm “FinLaw” and BTC-ECHO guest author Lutz Auffenberg also criticizes the centrality of the crypto securities register. The possibility that the eWpG creates for bonds is welcome, but there are deficits with regard to tokenized investment issues:

From my point of view, however, the law is not a great hit, especially with regard to token-based bond issues, because electronic securities and thus also the newly created special form of crypto-securities will have to be entered in central registers with specially approved registrars in order to benefit from a legal equivalence with the classic paper documents.

Lutz Auffenberg, founder of FinLaw, opposite BTC-ECHO

The advantages of the blockchain, which would mainly result from its decentralized nature, could not develop through the eWpG, since token emissions would be pushed back into the old centralized system. As a result, there is no economic or legal argument for companies that could justify an offer of crypto securities instead of traditionally securitized bonds.

The rules that the eWpG now lays down have been established. The digitization of securities is undoubtedly a step forward. The effects of the new crypto register will have to be observed. The federal government is entrusting its successor to the acceptance of digital shares. The law is to be reassessed after three years. Then, at the latest, the consequences for the crypto space will become apparent.