Electronic Securities Act (eWpG)
For more than a century, a German bond or fund unit needed a paper certificate in a vault. The Electronic Securities Act, eWpG for short, replaced the paper with an entry in an electronic register, either a central register at a securities depository or a crypto securities register on a blockchain. KfW, Siemens and real estate issuers have used it. Dated events on the topic are in the calendar below.
Why German securities needed paper
German civil law ties a security to a document. Even after trading moved to book entries, issuers still deposited a global certificate with the central securities depository, and investors held co-ownership shares in that piece of paper. A comment on the Duke FinReg Blog traces this requirement back to the civil code of 1896 and explains why the law kept the old property rules: an electronic security is treated as a thing, so ownership, pledges and insolvency work the way they did for paper.
The Electronic Securities Act has been in force since June 10, 2021. It lets an issuer create a security by entering it in a register, with no certificate at all, and it sets out who may keep such a register and how holdings move.
Central register or crypto securities register
The law has two kinds of register. A central register is kept by a central securities depository or a licensed custodian, and the securities in it settle through the usual bank chain. Clearstream's D7 platform issued the first digital bond of this kind, a 20 million euro KfW bond, as a central register security; the Deutsche Börse page has the details.
A crypto securities register runs on a tamper-proof record such as a blockchain. The issuer can keep it or appoint a registrar, and no central securities depository is needed. Keeping such a register is a financial service, so the registrar needs a BaFin license. Transfers of a crypto security in individual registration take effect through the register entry, and a buyer in good faith is protected, as a legal briefing on JD Supra describes. Custody of crypto securities for clients is a separate licensed business; the crypto custody page covers it.
Bonds, fund units and shares
The law started with bearer bonds and units of investment funds. Fund units have their own ordinance for the crypto form, and the answer on tokenized funds explains it. Later amendments added a section on electronic shares to the act: a stock corporation can issue registered shares into a central register or a crypto securities register, and bearer shares into a central register.
One corporate example: in September 2024 Siemens issued a 300 million euro, one-year digital bond under the act, which according to Siemens settled within minutes and in central bank money through the Bundesbank's trigger solution. Real estate developers issue property-backed bonds as crypto securities, described on the tokenized real estate page.
How the act fits with MiCA and the DLT Pilot Regime
A crypto security is a financial instrument, so MiCA does not apply to it; MiCA covers crypto-assets such as bitcoin and stablecoins. The act defines the instrument and its register. Where the security is traded and settled is a matter for securities law: an exchange, an MTF, or a venue under the DLT Pilot Regime such as 21X. Issuers who plan a first issue find the steps on the page on issuing tokenized securities in Germany.
Upcoming events on tokenized securities in Germany
Finance Loop and electronic securities
Gubbi, a Finance Loop Premium Partner, distributes tokenized securities under the act through its GDX Primary Market, with each issue entered in a crypto securities register run by a licensed register keeper. The Frankfurt Forum on Digital Assets & Applications, which Finance Loop covers, named the act among the rules that move DLT into capital markets, and the Crypto Assets Conference, a conference Finance Loop has partnered with, returns to it in its regulation sessions.
Investment & Digital Assets
What is the Electronic Securities Act?
It is the German law, in force since June 10, 2021, that lets a bond, a fund unit or a share exist as an entry in an electronic register instead of a paper certificate. The register can be a central register or a crypto securities register on a blockchain.
Who may keep a crypto securities register?
The issuer or a registrar it appoints. Keeping the register is a financial service that needs a BaFin license under the Banking Act.
Is a crypto security covered by MiCA?
No. A crypto security is a financial instrument and stays under securities law. MiCA applies to crypto-assets that are not financial instruments.
Electronic Securities Act and Finance Loop
Finance Loop covers electronic securities in its Investment & Digital Assets track, from the register rules to the bonds and funds issued under them. Finance Loop works with Gubbi, which distributes such securities, and with 21X, which runs a trading venue for tokenized securities, and brings issuers, banks and lawyers together at events in Frankfurt, Munich, Berlin and Hamburg.
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