German Law on the Introduction of Electronic Securities

The new “Act to introduce electronic securities” (Gesetz zur Einführung von elektronischen Wertpapieren – eWpG) enables the issuance of electronic securities. Under current German law, securities need to be represented by a physical certificate (Urkunde). This certificate forms the basis for the protection of ownership in the security and its transfer pursuant to German property law. The eWpG modifies this legal framework and states that bearer bonds (Inhaberschuldverschreibungen) can be issued in electronic format. In principle, securities in electronic form shall have the same legal implications as securities represented by a paper-based certificate. Further, securities in electronic form include “crypto securities”. The term crypto security is intended to be technology-neutral (including decentralised ledger technology) and is defined by reference to the requirements applicable to the securities register. In the future, further legislative measures will probably follow.