Cryptosecurities: The future of investments in the digital age
At a time when digital technologies are penetrating almost every aspect of our lives, finance is also on the brink of a revolution — and crypto securities are at the center of this change. This innovative form of investment promises to fundamentally change the landscape of capital markets through the use of blockchain technologies. A decisive factor for the acceptance and growth of crypto securities is regulation, which is established both at national level by the Electronic Securities Act (eWpG) and at EU level by the DLT Pilot Regime.
What are crypto securities?
Cryptosecurities, also known as digital securities, are financial instruments based on blockchain or similar distributed ledger technology (DLT). They represent ownership rights to assets, whether stocks, bonds, or other financial products, and are handled digitally without the need for physical documents. This digitization leads to increased transparency, reduced processing costs and improved access to global markets.
Legal framework: The eWpG and the EU DLT pilot regime
The Electronic Securities Act (eWpG), which came into force in 2021, has paved the way for the issuance and trading of crypto securities in Germany. It allows securities to be registered in electronic form without the need for a physical certificate. A clear legal definition and the creation of a register, which is monitored by BaFin, play a central role here.
In parallel, the European Union has introduced the DLT Pilot Regime, a regulatory framework specifically designed to test market infrastructures based on DLT. This regime should make it possible for existing regulatory requirements to be temporarily adjusted to promote innovation while ensuring market integrity and investor protection. The DLT pilot regime is a decisive step towards creating a single European market for digital securities.
DLT-based trading venues
Another exciting aspect of crypto securities is the creation of DLT-based trading venues. These innovative trading venues use distributed ledger technology to ensure seamless and transparent processing of transactions. The advantages of such a system are manifold: it enables real-time transactions, increases security through decentralized storage of data and reduces the need for traditional intermediaries. As a result, costs can be reduced and efficiency increased. A DLT-based trading venue also offers improved liquidity and can facilitate access to global markets by removing barriers that kept previously smaller or geographically isolated market participants away from the capital market. This development could fundamentally change the financial market landscape and usher in a new era of trading.
Opportunities and prospects
The introduction of crypto securities and the corresponding regulation offer a wide range of opportunities. For investors, this primarily means faster and more transparent access to capital markets and a reduction in entry barriers, as transactions can be carried out more efficiently and cost-effectively. Companies can raise capital more easily and quickly, and blockchain technology ensures immutable, secure documentation of all transactions.
For financial markets as a whole, these developments could result in more liquidity and a wider range of investable assets. The potential for cross-border investments is reinforced by the harmonization of regulatory standards within the EU.
Balancing innovation and regulation
The integration of crypto securities into the traditional financial system represents a significant innovation that has the potential to fundamentally change the way we think about investing and wealth management. With the right balance between innovation and regulation, we have an exciting future ahead of us. The next few years will show how far and how quickly crypto securities can renew the foundations of global financial markets.
