We observe that the digital economy through the use of DLT is on the road to decentralization this is particularly true for the financial industry. In essence, DLT is a decentralised “data base” which allows all its users to have the same information. All participants have a copy of the same data base which is updated automatically.

Using this new technology in the financial sector, we would like to stress on the importance of maintaining principles such as tech-neutrality and “same business, same risks, same rules” to uphold transparency, fairness, stability, investor protection and market integrity.

Chances

We endorse the efforts of digitalising securities and have been supporting this initiative for many years. We see a chance that existing and future markets continue to be secure, transparent and responsible – with an increased flexibility and efficiency through new technologies like DLT/Blockchain.

Neutral bodies such as FMIs are well positioned to develop forward looking solutions together with other actors in the financial industry due to their expertise, robust IT systems, their highly regulated processes and the established trust. 

Regulatory initiatives

Deutsche Börse Group welcomes the different regulatory developments fostering innovation regarding DLT/Blockchain and the use of crypto-assets on the level of the European Union, Luxembourg and Germany with i.e. the so called “Digital Finance Package” starting the political processes on: first the regulation on the markets for crypto-assets (MiCA), second the regulation on a pilot-regime on DLT market structure, third the targeted changes of EU financial markets regulations referring to crypto-assets qualifying as financial instruments and fourth the digital operational resilience act (DORA) as well as the processes on the introduction of electronic securities in Germany as well as the law facilitating dematerialisation in Luxembourg.

We welcome the regulatory efforts to digitise securities at all levels and have strongly supported such initiatives for many years.

Nevertheless, parts of the European Commission´s proposal for the Pilot regime still raise some questions and we believe that some adjustments will be necessary to ensure consumer protection, market integrity and a level playing field. Experience from past financial crises has shown that fundamental principles such as consumer protection, financial stability or the conduct of an orderly monetary policy must not be compromised and must be ensured in the interest of society, irrespective of the technology used and also in the context of a testing-phase.

These principles should not be invalidated by the mere reference to the promises of new technologies. Innovation and new ideas must be allowed to mature within a stable regulatory framework which reconciles competition, investor protection and financial stability.