German government introduces new law for digital currencies by 2021

German Parliament is going to decide on regulation of crypto currencies unsplash-logoAC Almelor

In September 2019, the Federal Cabinet adopted a block-chain strategy.  Now the government is planning the first concrete steps. 

The draft law on the implementation of the amending directive to the Fourth Money Laundering Directive (EU) 2018/843, which was adopted by the Federal Cabinet on 31 July 2019, includes measures to create more legal security for trading platforms and cryptosecurities depositories. The bill is currently being discussed by the German Bundestag. 

New types of money that are not based on the euro or any other nationally or internationally recognised currency include high risks which does not only mean investment risks. It is not only national monetary policy that is likely to be jeopardised by a widespread use of these parallel currencies. Money laundering, terrorist financing and data protection are also at risk. It is therefore imperative that states begin to regulate this grey area. 

In response to a parliamentary question, the German government now admits that it is pushing ahead with the regulation of crypto-assets in close coordination with the European Securities and Markets Authority (ESMA). According to the German government, a law on the introduction of electronic securities could come into force before the end of this legislative period. 

It is currently preparing a corresponding draft law. Overall, the Federal Government intends to work at European and international level to ensure that the so-called “stablecoins” do not become parallel currencies that are in de facto competition with national currencies. To this end, the development of new governance structures is financially supported. The German government is also open to new cooperation models, as it states in its block chain strategy.