The German government is asking blockchain companies for advice. The goal is to assess the opportunities and pitfalls of the technology and formulate a blockchain strategy by summer 2019.
Berlin is home to 170 blockchain companies. Leading German pharma corporations or automobile manufacturers have also shown interest in blockchain technology and launched their own initiatives. Despite these developments, the space remains largely unregulated in Germany.
That might change soon. The government has recently asked local blockchain companies and industry groups how they use the technology. The consultation process is said to be the first step ahead of a blockchain strategy formulation in the coming months.
Regulatory moves in other European countries put pressure on German lawmakers
Currently, there is no blockchain or crypto-specific regulatory framework in Germany. The government has also issued warnings against crypto investments and the Bafin, which is the national financial markets watchdog, has shut down several crypto exchanges in the past.
Considering that Germany is the largest and strongest European economy, its blockchain industry is rather small. Businesses prefer to set up shop in neighboring Switzerland or Liechtenstein because both have put blockchain-friendly frameworks in place. Companies in Germany, on the other hand, complain that there are too many barriers of entry and no formal legal procedures to set up their businesses in accordance with the law.
Besides Switzerland and Liechtenstein, several other European countries have started to draft legislation. Luxemburg, Italy, and France have all issued first blockchain-related decrees. In the meantime, the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) have advised the EU-commission to investigate the need for pan-European legislation.
Thus, German lawmakers have come under pressure. Without a clear legal framework, Europe’s largest economy might miss out on opportunities to attract businesses and foster innovation.
Blockchain “Strategy” by summer 2019
The consultation process is led by the Ministry of Finance and the Ministry of Economic Affairs and Energy. It will continue its consultations in the next few weeks, with the goal to formulate a concrete blockchain strategy by summer 2019.
As part of the consultation process, the government will launch a website that lists pilot projects. “Businesses, associations, and other institutions are welcome to express their opinion regarding the opportunities, the pitfalls and use cases of the technology,” says a government official.
As a next step, the government wants to decide on concrete actions. While the government considers blockchain technology as a potential key technology for digitalization, it will also investigate its environmental impact.
The government also announced that the strategy will include cryptocurrencies, which could be used to streamline administrative processes or increase transparency.
Future remains unclear
Leading German companies such as pharma giant Merck or car manufacturer Daimler have already launched their own blockchain projects. As in most countries, the private sector is aware of the innovative potential, but the government lacks behind.
Even though the German government is now taking the first steps, it remains unclear whether the “strategy” will eventually be put into concrete laws. But one thing is for sure: The regulatory debate in Europe is in full swing and governments are positioning themselves. We will see how that plays out, but overall, it’s good news.