Forex in this article
• Rejuvenation for the capital market
• Focus on digitization
• Blockchain technology could be considered
Germany should become a leading location for start-ups and growth companies
At the end of June, Federal Minister of Finance Christian Lindner and Federal Minister of Justice Marco Buschmann presented the cornerstones of the so-called Future Financing Act. The law must be understood as a collection of measures to modernize the capital market and make it easier for companies to access it. The focus of the two FDP politicians is on startups, growth companies and small and medium-sized companies, reads a statement from the Federal Ministry of Finance.
“We want to make Germany the leading place for start-ups and growth companies. That is why we are improving access to the capital market and making it easier to raise equity capital,” Lindner said as part of the announcement. “We create simplifications within financial market law, develop company law and improve the tax legal framework, especially for employees’ capital shares. Within tax law, we give an important push to strengthen the share culture. We want to create an exemption for profit on the sale of shares and share funds in private assets We lift narrow loss compensation limits and at the same time simplify the investment.”
#Share as a long-term contribution to strengthening economic independence & social security, 🇩🇪 must become more attractive, then @c_lindner. Discuss exemption from profit on sale of shares and securities in private assets. #Future financing act pic.twitter.com/PQM5SCKm99
– Federal Ministry of Finance (@BMF_Bund) 29 June 2022
Digitization must modernize the capital market
The main focus should be on digitization, as Buschmann also explained at the end of June. “Digitalization in the capital market is a particularly important topic for the future. What we have already started in the field of business and company law, for example with the introduction of the virtual general meeting, online authentication of business register applications or online establishment of a GmbH, we will also consistently do to use the capital markets.” The Electronic Securities Act must also be extended to include shares. Capital increases should also be carried out more easily.
According to the ministry, the future financing act should enter into force in the first half of the current election period in order to benefit the economy, wage earners and savers as quickly as possible. According to “Dow Jones Newswires,” Lindner wants to start the legislative process as soon as possible and finish it within a year.
The crypto sector may benefit from future funding legislation
The ministry intends to promote the digitization of the capital market by, among other things, issuing shares in the form of electronic securities. Here you can also think of using blockchain technology or comparable approaches, reads the announcement from the authority. In this context, an “enhanced transferability” of crypto-assets is also possible, as German legislation has so far only offered rules for selected crypto-assets.
Member of the Bundestag Frank Schäffler also had words of praise for his party colleagues’ draft law. “Hit the nail on the head,” the FDP parliamentary group’s spokesman for FinTech and blockchain innovations wrote on his blog in early July. “The cornerstones of the Capital Markets Modernization Act show that the FDP in government ensures future investment needs. These points are forward-looking, especially in the blockchain area.” The law contains clearer rules for the purchase and transfer of cryptocurrencies and the removal of bureaucratic obstacles. “Not only the European negotiations on MiCA and TFR, but also these cornerstones prove that we with the FDP in the federal government can be pioneers in Web 3 and in exploiting the potential of blockchain,” summarized Schäffler. “A good day for Germany as a blockchain location.”
“Disgusting lack of understanding of startups’ situation”
Fintech expert and lawyer Eric Romba, who works for the law firm Osborne Clarke, sees room for improvement regarding the Future Financing Act, as he emphasized to “BTC-ECHO”. “Certainly, there are still many unanswered detailed questions behind the cornerstones. It remains to be seen how the implementation will go, because it will also be contradictory, especially in the DLT and blockchain space [sic!] interests,” Romba told the crypto portal.
But the announcement from the ministry did not only spark opposition to cryptocurrencies. Christian Miele, managing director of the start-up association, welcomed the upcoming financing law in principle, as a simplified process for stock market listings and employee capital participation is necessary. “However, an increase in the tax deduction is not a suitable instrument to make the employees’ capital share attractive to start-up companies,” replied Miele in a press release from the association. “The proposal reveals a frightening lack of understanding of the plight of startups.” It is essential to avoid taxing so-called “dry income”, i.e. income without cash flow. “Germany cannot afford to fail again on this important issue. Last year there was a mistake in making the framework conditions internationally competitive – a new attempt should be made with the future financing law. This is urgently needed because Germany remains one of they occupied the last seats”, was the chairman’s verdict.
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