Bundesverband Alternative Investments e.V. (BAI)

The topic of digital finance is of particular relevance to the AI industry with regard to digital assets and the use of block chain or DLT technology. In the context of the block chain strategy of the Federal Government of Germany and the Digital Finance Package of the EU Commission, various legislative projects are currently being pushed forward. Of particular relevance in this context is the draft law on the introduction of electronic securities jointly submitted by the Federal Ministry of Finance and the Federal Ministry of Justice (Germany) and the draft regulation on the regulation of crypto asset markets (Markets in Crypto Assets, MiCA) submitted by the EU Commission. For the time being, the administrative practice developed by BaFin on the regulatory classification and treatment of crypto tokens, ICOs, etc. is still valid.

 

Legal basis

Electronic Securities Act

The german Electronic Securities Act (eWpG) is a legal framework that regulates the issue and transfer of securities in electronic form. The introduction of the eWpG replaces conventional paper certificates with electronic registers in order to make the trading and administration of securities more efficient and secure.

The eWpG creates a legal framework for the issuance and custody of electronic securities, such as shares, bonds or investment fund units. It sets out the requirements for the issuance, transfer and custody of these electronic securities and regulates the legal status and the rights and obligations of the parties involved.

By switching to electronic securities, the eWpG enables transactions to be processed more quickly and efficiently, as securities are transferred electronically and in real time. It also reduces costs and administrative overhead compared with physical custody of paper certificates. Another important aspect of the eWpG is the protection of investors and the security of electronic securities. The law sets strict security standards for electronic custody and transfer to prevent manipulation, theft and misuse.

The new regulation contributes to the modernization of securities trading and creates a legal basis for digital transformation in the financial sector.

eWpG

 

Regulation on crypto fund shares

The Regulation on Crypto Fund Shares regulates the legal requirements for trading and managing shares in investment funds that invest in cryptocurrencies.

Regulation KryptoFAV
 

Kryptowertetransferverordnung 

The Crypto Transfer Regulation regulates the legal requirements for the transfer of cryptocurrencies, establishing anti-money laundering and counter-terrorist financing measures.

KryptoWTransVO

 

 

 

Digital Finance Package of the EU Commission

The EU Commission's Digital Finance Package is a set of proposals and measures aimed at promoting and regulating the digital financial sector in the European Union. The package was developed by the EU Commission as part of its strategy for a digital single market and includes various initiatives to modernize and strengthen the financial sector in the age of digitalization.

A central component of the Digital Finance Package is the creation of a uniform legal framework for digital financial services in the EU. This includes proposals for harmonized regulation of cryptocurrencies, digital securities and crowdfunding platforms. The aim is to improve consumer and investor protection and ensure the integrity of the financial system while promoting innovation and competition.

In addition, the package includes measures to promote cross-border access to digital financial services. Proposals are introduced to simplify and speed up identification and verification procedures to enable consumers and businesses to use financial services seamlessly across national borders.

The Digital Finance Package also focuses on promoting innovation and fintech companies. Measures will be taken to improve access to finance for startups and small businesses and reduce regulatory hurdles. This is intended to encourage the development of innovative digital finance solutions while ensuring that they meet the required compliance and risk management standards.

The EU Commission's Digital Finance Package aims to strengthen the digital finance sector in the EU, increase consumer confidence and unlock the potential of digital innovation. It is about creating a balanced regulatory framework that ensures the protection of consumers and investors while creating space for innovation and growth. Through these measures, the EU should consolidate its position as a leading player in the global digital financial sector.

 

Communication of the EU commission to the DIgital Finance Package, dated by September 24, 2020

 

General information

Digital Finance

 

Regulations

MiCAR

Proposal for a REGULATION on a pilot regime for market infrastructures based on distributed ledger technology

Proposal for a REGULATION on digital operational resilience for the financial sector (DORA)

Proposal for a DIRECTIVE amending Directives 2006/43/EC, 2009/65/EC, 2009/138/EU, 2011/61/EU, EU/2013/36, 2014/65/EU, (EU) 2015/2366 and EU/2016/2341

BaFin administrative practice

The Federal Financial Supervisory Authority (BaFin) has the task of creating clarity and transparency here by defining guidelines and requirements for companies and service providers that offer or use digital financial services. Protecting the integrity and security of the financial system for the benefit of consumers and investors is a top priority. Therefore, its digital finance administrative practices include measures to combat money laundering, terrorist financing, and other illegal activities. It also sets requirements for data security, risk management and compliance to ensure the stability and integrity of the digital finance sector.

In addition, BaFin continuously monitors developments in digital finance and adapts its administrative practices accordingly to respond appropriately to new challenges and opportunities. It also cooperates with other national and international supervisory authorities as well as stakeholders to create a harmonized and coherent legal framework for digital financial services.

BaFin's digital finance publications play an essential role in creating a safe and trustworthy environment for digital financial services in Germany. It ensures that companies and service providers meet the necessary requirements to ensure the protection of consumers and investors and to strengthen trust in the digital financial sector.

General information provided by BaFin concerning company start-ups and fintech companies

Guidance notice ICOs

Guidance notice – guidelines concerning the statutory definition of crypto custody business 

Additional Information

The International Organization of Securities Commissions (IOSCO) has published a draft regulation regarding crypto assets in May 2023. The consultation draft encompasses 18 policy recommendations crypto-asset service providers (CASPs) and cover the entire lifecycle of crypto-assets from offering, admission to trading, ongoing trading, settlement, market surveillance and custody as well as marketing and distribution to retail investors.

Click here to go to the IOSCO consultation draft on crypto-asset service providers (CASPs)

Click here to go to the main topic of the association's work: Crypto-Assets und Digitisation

BAI Feedback Statements

 

 

Statement on the consultation on the BMF and BMJ key issues paper on electronic securities and crypto tokens - April 12, 2019

and

Statement on the Draft Law on the Introduction of Electronic Securities - September 14, 2020

 

BAI Documents/Contributions

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