Security tokens regulations - Germany take up the challenge

Bitbond as the first company based on technology blockchain, received approval BaFin - German market regulator. This is another important step towards regulating the digital asset market.

STO an alternative to traditional financial markets

Incorrect management of money by financial institutions may have serious consequences, and one of them has suffered the whole world in 2008 the year in which the global financial crisis broke out.

This is how the need arose to create a safer alternative to trading in funds. This alternative has become decentralized financial products based on blockchain technology, including kryptowaluty and Security Token Offering (HUNDRED)

The latter are enjoying a growing popularity recently, and their use can generally be reduced to offering companies digital assets, in return for which they receive capital from investors necessary for their functioning.

STO it turned out to be not only a more efficient, but also a more economical tool for raising funds. For such non-standard solutions, however, there is a need for appropriate regulations, which are difficult to achieve full compliance. More and more entities that decide to use blockchain technology are seeking regulatory approval.

Security tokens regulations. So how can German companies get regulatory approval?

Security tokens regulations they are quite a complex area, and getting the approval of the regulatory body is not the easiest one. First of all, a company that wants to obtain such compliance must justify why the STO is the most beneficial method for raising funds for it. Then she should engage in a constructive dialogue with the financial regulator. German regulators see cryptocurrencies and other blockchain-based products as units of account, therefore, treat them like any other Financial instruments. Digital services must therefore obtain acceptance BaFin, or the German regulator of the financial services market. After receiving the application for acceptance, the institution has 20 days to issue a decision.

Bitbond acquires the acceptance of the German authorities supervising the financial market

Last year, Bitbond negotiated with BaFin to submit its arguments for the introduction of its own STO.

During the talks, a lot of space was devoted to discussing the principles of block-based transactions, as well as potential benefits and threats. Bitbond also described in detail the mechanism of its STO.

As the company's representatives emphasize, the awareness of supervisory authorities may be important for their decisions, thus affecting the security tokens regulations.

Bitbond gained acceptance, thus becoming the first regulated STO operator, but the whole process took several months.

The company presented a completely new concept, for which there were no comparative points, thus purging the regulatory trail for subsequent digital offers.