Germany plans to issue electronic shares on blockchain, boost startups

Under the Future Finance Act, the German government is pushing for more welcoming regulations for startups working with financial innovation.

The German government is pushing for more welcoming regulations for startups working with financial innovation in the country, according to the newly drafted legislation of the “Future Finance Act” introduced by the finance ministry on April 5. 

Key goals of the legislation include capital markets digitalization through the issuance of electronic securities on a blockchain and improved portability of crypto assets. According to a translated version of the draft bill, Germany’s “capital market should become more modern and efficient in order to mobilize more private capital for future investments.”

Among the government’s targets is to create a favorable environment for startups and investors in the country. The legislation reduces the minimum market capital for initial public offerings (IPOs) from 1.25 million euros ($1.37 million) to 1 million euros ($1.1 million) and facilitates investments by institutional players in startups, small businesses, and special purpose acquisition companies (SPACs).

Der Finanz- und Start-up-Standort braucht ein Update. Mit einem höheren Freibetrag für Mitarbeiterkapitalbeteiligungen, der Reform der Dry-Income-Besteuerung und einem besserem Kapitalmarktzugang legen wir den Grundstein. CL #Zukunftsfinanzierungsgesetzhttps://t.co/422WaT0ytL

— Christian Lindner (@c_lindner) April 4, 2023

According to local media reports, the new rules would apply to businesses employing up to 500 people and with revenues below 100 million euros ($109 million).

“We want to make Germany the leading location for start-ups and growth companies,” German finance minister Christian Lindner said in a statement. “That is why we are improving access to the capital market and making it easier to raise equity. Small and medium-sized companies will also benefit from this.” 

The government claims the move would make Germany more attractive to investors and promote a culture of stock market investments. “Startups, growth companies and small and medium-sized companies should have easier access to the capital market,” noted the minister.

Germany is a member of the G7, a group of the world’s seven biggest democracies. Together, G7 members are working on tougher crypto regulations, which many in the industry believe could stymie innovation and growth. The G7’s new agenda is expected to be disclosed at its next meeting in Hiroshima, Japan, which is scheduled for May.

Magazine: Best and worst countries for crypto taxes — plus crypto tax tips