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With the introduction of the Electronic Securities Act (eWpG), electronic fund units can be issued in common funds (Sondervermögen). The physical securitization previously required in a global certificate issued by the central securities depository (CSD) no longer applies. According to section 12(2) of the eWpG in conjunction with section 4(6) of the eWpG, the registrar for electronic fund units is the central securities depository or, if explicitly authorized by the issuer, a custodian (also called custodian bank).
To further promote Germany as a fund location, the Regulation on Crypto Fund Units (KryptoFAV) opens up the possibility for providers of investment funds to issue units in common funds (Sondervermögen) as crypto fund units by registration in a crypto securities registrer based on distributed ledger technology (DLT). The registrar for crypto fund units in a crypto securities registrer is the depositary of the investment fund or a third party designated by the depositary licensed as a crypto securities registry.
The Luxembourg legislator has also formally laid the groundwork for using DLT-based registries for fund units. Thus, two of the most important jurisdictions for investment funds are sending a clear signal to the entire industry. Based on DLT, the European market will experience a digital transformation of the entire value chain within the fund industry.
Issuance of electronic fund units (also for existing funds possible)
Elimination of global certificate and entry in an electronic central securities register
Analysis of existing processes and involved systems of the subscription and redemption process, incl. interfaces and time dependencies
Analysis of the procedural changes from the introduction of electronic fund units/crypto fund units and development of a target operating model
Target operating model options: 1. in-house development 2. outsourcing of crypto securities registry 3. use of a software-as-a-service (SaaS)
Planning of implementation activities, incl. cost estimation of different expansion stages of the application scenario
How can asset managers & custodians benefit from crypto securities registry?
We offer a modular procedure model for the implementation of digital fund units.
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Crypto Securities Registry for Asset Manager & Custodian