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June 29, 2022

Overview To Electronic Securities

Dispute Resolution
Reading Time: 3 minutes

Securities are one of the most important parts of the commercial system used by all over the world. It is actively used not only for transactions between traders, but also in legal relations involving non-traders. Securities has been regulated in detail by the legislator due to the fact that these documents are in such a life both in our country and in the world. Traditionally, rights and promissory notes are an inseparable whole in securities. Therefore, rights arising from securities cannot be claimed separately. As is known, bills of exchange are classified as checks, policy and bono in the Turkish Commercial Code. 

Since law is a living social science, it shows developments in line with technological developments. Especially, the perspective of centralized authorities has changed with blockchain technology in the world of economy. Naturally, many perspectives have developed in the world of law as the science of economics is affected by technology. While the issues of regulation of cryptocurrencies are being discussed in many countries, alongside of this discussion, securities are also included in. Especially the German Electronic Securities Law, which came into force in Germany in 2021, provided a great innovation in terms of securities. The German Electronic Securities Law essentially brings up two different types of electronic securities. The first of these is electronic securities with a centralized structure. The second is the crypto securities that is foreseen to be used with blockchain technology. 

In this article, especially the German Electronic Securities Law and electronic valuable documents that come to the agenda of the legal world will be mentioned.

  • OVERVIEW TO ELECTRONIC SECURITIES

As the name suggests, electronic securities are legal instruments that does not have a physical copy and continues to exist entirely in the electronic environment. At this point, the German Electronic Securities Law, which is the first comprehensive regulation, states that electronic securities are no different from physical securities in terms of legal validity. This regulation actually shows that the German legislator is particularly open to a decentralized securities world. Therefore, it can be stated that this innovation envisaged for the financial infrastructure of a country like Germany, which is a world giant and a very important actor in economic relations, is a great reform. 

From this point of view, it can be predicted that the leadership in this field is likely to dominate the whole world. It can be predicted that electronic securities will soon take place in our lives when the thousands of studies on blockchain technology and hundreds of scenarios produced for the metaverse universe were considered. the German Electronic Securities Law will lead the way, especially in terms of European civil law.

As stated above; two different definitions of securities, which have a centralized structure and which have a decentralized structure, are included in the German Electronic Securities Law. Electronic securities with a centralized structure (Electronic Securities) can be defined as digital assets that use the infrastructure of the traditional financial system. The German legislator regulates those electronic securities with a centralized structure will be managed by the central securities depository. Another type of security is defined as crypto securities (Crypto Securities).  It can be stated that the crypto securities are anonymous, unlike electronic securities with a centralized system. Crypto securities are registered with license operating as a financial service provider in accordance with the German Banking Law. The most important feature of crypto securities is the use of distributed ledger technology. These two different types of securities can be accepted as the reflection of the technological developments that have evolved the world of economy to the world of law.

  • CONCLUSION

The function of law that regulates and protects human life cannot adapt to the technological developments experienced in recent years at the same speed. The fact that law does not progress at the same pace as technological developments brings along many conflicts. However, the German Electronic Securities Law is a great sign for the law to adapt to technological developments at the same speed. Especially in Germany, which is the giant of the European Union, a regulation in this direction will primarily affect the other countries of the European Union and also Turkey. It is expected that studies on electronic securities will also be carried out when taking into account the regulatory studies carried out by the Turkish legislator on decentralized structures. In our country, which is at a very advanced level in the fields of banking and financial technologies, it is obvious that there will be developments in terms of electronic valuable documents in the near future.

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