The new German coalition has explicitly mentioned blockchain and cryptocurrencies in its coalition agreement. The alliance aims to make the “European financial market supervisory law” fit for crypto-assets and businesses.
Germany’s incoming government has presented a coalition agreement that mentions blockchain technology and cryptocurrencies for the first time. In what is expected to be a new dawn for the country, the coalition said crypto and blockchain would be the pillars that will support the country’s development in the next four years.
An equal playing field between traditional finance and innovative business models
The so-called “Traffic Light” coalition government that is made up of the center-left Social Democrats (SPD), the Green Party, and the right-friendly Free Democrats (FDP) take the reins from December this year. The coalition is advocating for an equal playing field between traditional finance and “innovative business models.” The agreement stated:
“We are making European financial market supervisory law fit for digitization and for complex group structures to ensure holistic and risk-adequate supervision of new business models […] we need joint European supervision for the crypto sector. We oblige crypto asset service providers to identify the beneficial owners consistently.”
Prevention of the exploitation of crypto values
According to the coalition agreement, there should be a new “dynamic regarding the potential and hazards posed by new financial technologies,” such as crypto assets and blockchain firms. The document states that the European Union supervisory authority should look beyond the traditional financial sector to prevent the exploitation of crypto values for money laundering and terrorist financing.
The incoming government promised to build a digital state and to develop new cryptocurrency and blockchain strategies. Additionally, the new government believes that Germany should become one of Europe’s top places for Fintech and InsurTech platforms. This should include neo-brokers—consumer-focused finance apps for stock trading and other investment possibilities.
Allocate up to 20% of their funds to cryptocurrencies
Politician Frank Schäffler of the FDP pointed at one remarkable paragraph on the document about a provision to allow the issuance of tokenized stocks. The statement reads:
“Digital financial services should work seamlessly; therefore, we will create the legal framework and the possibility to expand the issuance of electronic securities to include stocks.”
Earlier this year, the German government adopted new legislation that allowed institutional investment fund managers, a.k.a Spezialfonds—to allocate up to 20% of their funds to cryptocurrencies. Sven Hildebrandt, CEO of Hamburg-based Distributed Ledger Consulting (DLC), said:
“The coalition agreement is clear: after allowing tokenized funds, the next step is tokenized stocks. This is exciting and will accelerate blockchain adoption tremendously.”