The Electronic Securities Act (eWpG) is a German law that came into force in June 2021.
It aims to modernize the issuance and trading of securities by making it possible to issue purely electronic securities without a physical document and creating so-called Crypto Securities.
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The central element of Electronic Securities is their entry into a register, which can only be operated by a BaFin-licensed financial institute, like NYALA’s Smart Registry. The eWpG allows registration in both centralized and decentralized registers (so-called Crypto Securities Registers).
Under the eWpG, electronic securities can be registered in a Crypto Securities Register, operated on the basis of Distributed Ledger Technology (DLT).
Electronic Securities that are issued through entry in a crypto securities register are referred to as Crypto Securities and need to be mantained on a tamper-proof system of record and protected against unauthorised deletion and modification.
Crypto securities registration is a financial service supervised by BaFin (German Federal Financial Supervisory Authority), and it is subject to requirements regarding business organisation and conduct.
The alternative is for electronic securities to be entered in a Central Securities Register.
The physical global certificate used earlier is now being replaced by the entry of the issue in a database. The transactions are reported in electronic transactions on securities accounts.
Central registers may be kept by a securities collection bank (also known as a central securities depository) or, if expressly permitted by the issuer, by a depositary (also known as a custodian bank).
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