More than 50% of customers show high interest in the issuance of crypto securities
Comparing crypto securities with security tokens: how the new electronic securities act is changing private capital markets
December 17th, 2021
On June 10, 2021, the new Electronic Securities Act (eWpG) came into force. This makes the purely digital issuance of securities possible for the first time. As we at Cashlink have been eagerly waiting for this regulatory change, we were curious about how the market is perceiving this new law and came to the results that more than 50% of our customers showed interest in crypto securities and their use cases. But what about security tokens?
As security tokens have been numerously implemented in the last few years, the following question arises: what does actually change with the new law? Are crypto securities significantly different from STOs?
This whitepaper [for now only available in German] dissects the question of differentiability in 25 pages presented in four parts: the technical structure, tradability, regulatory change and future trajectories of both securities. We asked numerous experts on these topics (including the renowned independent law firm Annerton) and ended up with an all-encompassing paper that covers everything you need to know about the new securities act, as well as the differences between crypto securities and security tokens.
These were the results in short:
The new act’s requirement for the securities to be regulated by the BaFin resulted in the technological setup being more strict compared with security tokens. With the necessity to for example integrate a KYC process into the issuance process, issuers and investors gain a new level of security during their transaction. This among other new regulatory demands a change of the technological setup of security tokens.
New Liability, tradability and transparency regulations fundamentally change the possibility of crypto securities, especially when looking at private capital markets, opening countless new use cases compared to STOs.
The probably most interesting regulatory aspect is the added protection of good faith when it comes to crypto securities. This changes the possibilities for stakeholders when looking at secondary markets, as a newly introduced crypto securities registry offers a secure layer for both issuer and investor.
Looking short term, the trajectory of security tokens and crypto tokens may look very similar, but as one looks five to ten years down the line the narrative changes completely. With the EU seeing the potential in decentralized systems for the financial landscape, it is only a matter of time until we will reach completely DLT-based capital markets.
As the topic surrounding electronic securities is fairly new, due to the just recently passed law, our goal with this whitepaper is to give its readers a general understanding concerning how the eWpG is fundamentally changing the German financial landscape with crypto securities.
If you are keen on knowing why so many stakeholders are interested in the new electronic securities act, be sure to register down below to get your very own copy of the whitepaper [For now only available in German] today.
Start now with electronic securities in accordance with the eWpG – Issue crypto securities with Cashlink
With the new electronic securities act, central register securities and crypto securities will enable more digital, faster and more cost-efficient processes on the capital market.