Germany: New law paves way for crypto stocks

A new regulation in Germany recently paved the way for the issuance of tokenized digital shares. The new law, dubbed the Future Financing Act by the German Ministry of Finance, aims to encourage private wealth accumulation and mobilize more private capital for future investments.

The passage of this law allows companies to issue either electronic or traditional shares. The electronic securities can be registered in the central register or on the blockchain, which leads to them also being referred to as crypto shares.

New law paves way for tokenized digital shares

A notable improvement introduced by the Future Financing Act is the lowering of the minimum capital requirement for IPOs to one million euros. This change aims to encourage investments in small businesses and start-ups. However, it is unclear whether crypto exchanges will be allowed to trade tokenized shares. In the past, the trading platform FTX, which collapsed in November 2022, successfully sold these shares.

Federal Finance Minister Christian Lindner commented on the law and emphasized that the aim was to make Germany the leading location for start-ups and growth companies. Improving access to the capital market should make it easier to raise equity.

Worth knowing : Shares of Deutsche Bank fall

This law continues the country’s trend of creating a favorable regulatory environment for cryptocurrencies. Germany was ranked as the most crypto-friendly country in the world by CoinCub last year . The ranking took into account the country’s regulatory clarity and strong legal framework when making its decision.

Further progress in Germany

It is important to mention that German law already allows the issuance of tokenized bonds and funds. The added law now expands the legal scope for tokenization to include stocks. Companies will thus be able to issue digital tokens to collect investments and increase their equity.

The Federal Financial Supervisory Authority (BaFin) recently granted Boerse Stuttgart Digital, the second largest stock exchange in the country, a license to expand its offering to include crypto custody accounts. In February this year, the third-largest publicly traded company in Germany, Siemens, issued its first €60 million ($64 million) digital bond on the  blockchain Polygon (MATIC). With the advent of crypto stocks, companies can now also tokenize their stocks and start investing on the blockchain .

Interesting : G7 call for crypto regulation: That is why it is now necessary