Cybersecurity is a growing concern in almost any industry, but it has become an especially glowing one for those involved in the financial and banking sectors. Many companies, along with governmental agencies, have been looking for technological advancements that can assist in protecting user accounts and transactions, and the solution to this appears to be blockchain technology.
On Friday, a paper was issued by the German Federal Ministry of Finance and the Federal Ministry of Justice and Consumer Protection discussing the steps that should be taken to provide greater electronic security and regulation to protect offerings related to crypto-tokens. It is hoped that these measures will strengthen the authority of the German government and also make Germany one of the leading locations for fintech companies to develop.
The paper was focused on a number of areas, beginning with the idea of creating restrictions and regulations related to electronic securities. Currently, there are a limited number of laws regarding this kind of restriction, but the two departments concluded that there is a growing need for electronic security.
The other major concern was regarding public offerings of crypto-tokens. These tokens have become key financial instruments as well as investments, but do not count as them according to the Securities Trading Act. This is expected to be changed under the new guidelines proposed by the agencies.
It is hoped that greater regulation will prevent money laundering as well as assist in the protection of user accounts. Blockchain technology has quickly become the remedy to protect these kinds of investments, but the concern across Germany has been that they are lagging behind some of their European neighbors in terms of the development of security technology.
We reported last week that financial-technical companies, or fintechs, are on the rise in Switzerland, as the government is investing a significant amount of capital while reducing regulations to see these companies thrive. However, Germany has not created the same kind of amicable atmosphere where these businesses can prosper.
This is one area where the ministries want to see a dramatic improvement. Currently, Germany ranks second only to Great Britain in terms of fintech investment in Europe, but it is likely that Switzerland will surpass them by the year 2020 and, with Great Britain looking to exit from the European Union, Germany may find themselves as a secondary player in this industry.
German financial institutions are the most successful on the continent, and Germany is the wealthiest of what will be the remaining EU members. To find themselves lagging in the fintech industry seems reprehensible for a nation whose financial markets top those of the rest on the continent. Dramatic changes must be coming.
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