Catching up: How Germany Is Becoming a Blockchain Frontrunner
Germany has significantly lagged behind the rest of the EU in terms of digitalization and globalization. Read this blog to discover how they are catching up!
Germany is well-known globally for its technological achievements: heavy machinery, cars, medical equipment, but digital technologies? Not so much.
The Digital Economy and Society Index – DESI ranks the 28 EU member states according to their digital adoption level – in 2019, Germany was only at rank 12. Based on these results, Germany does not live up to its reputation of being a technology leader.
And that’s just within the EU. Going more global, Germany significantly lags behind other nations.
Lack of legal security hinders blockchain development
The future is digital, and the Germans know that, too. That’s why the German government is trying to push digital technologies. One field where German lawmakers see an opportunity is blockchain technology.
A key challenge of many blockchain businesses today is the lack of legal certainty. Most legal frameworks do not address blockchain-specific questions: How can digital ownership be transferred from one party to another? What is the legal definition of a “token,” what tax treatments apply for cryptocurrencies?
The lack of legal security makes it hard for companies to launch products, as they don’t know how those products might be governed in the future.
An opportunity to be a first-mover
The German government wants to pioneer this space and has published a blockchain strategy in mid-2019. It entails a roadmap on how the country could become a leading blockchain nation.
Since January 2020, German banks are officially allowed to provide cryptocurrency custody and trading services. As a next step, the government plans to introduce a law for blockchain-based bonds, enabling businesses to tokenize financial securities and market them in a bond-structure. If that proves successful, the government wants to expand this law, including stocks as well.
That’s a start, and more legal initiatives are in the pipeline. Blockchain could become a massive opportunity for Germany. The country could take over the lead with critical technology and regain its global standing as one of the most advanced locations for technological innovation.
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