Germany’s new law allows companies to issue tokenized shares

Germany is continuing to make its environment as startup friendly as possible. Its new Future Finance Act will allow the testing of improved transferability of digital assets. Its move is to make the ecosystem welcoming for startups with financial innovation.

The Future Finance Act was officially enacted on April 5 by the finance ministry. Its goal is to digitize capital markets by issuing electronic securities on blockchain and improving crypto asset transferability. Companies have the freedom to tokenize their shares. It, however, still needs to be determined whether the shares can be traded on exchange sites. According to the German Ministry of Finance, the law will support more private asset accumulation and private capital for future investments.

The law will make startups and investors thrive. Part of the goal is to reduce the minimum market capital for IPOs(initial public offerings) from $1.37 million to $1.1 million. The new law will also facilitate investments by institutional investors, small businesses, and special purpose acquisition companies (SPACs).

The legislation is limited as it will apply to companies with less than 500 employees and earn revenues of less than $109 million. This leaves many companies included.

According to German finance minister Christian Lindner, their objective is to improve access to the capital market and simplify raising equity. Many companies, including SMEs, will benefit, making Germany the number one location for startups and growth companies. Germany will also be investors’ leading destination as stock market investments will be promoted.

Germany is already considered one of the most crypto-friendly countries in Europe. Despite being a member of the G7 working on making strict crypto regulations, Germany is making moves to make it earlier for crypto/finance startups. Its second-largest stock exchange, Boerse Stuttgart Digital, recently got a crypto custody license. The license was issued to promote crypto activities in the region.