Crypto Fund Shares Regulation (KryptoFAV)

Our expertise covers markets in crypto assets (MiCAR), the DLT pilot regime, crypto custody and cryptocurrency securities registry, and many more.

Background of KryptoFAV

The German Crypto Fund Shares Regulation (”KryptoFAV“), which came into force on June 18th, 2022, expands the German Act on the Introduction of Electronic Securities (”eWpG“). One of the core aspects of the eWpG was that it only applied to bearer bonds. With the introduction of KryptoFAV, the eWpG was expanded with crypto fund shares.
Although the amendment to Section 95 KAGB within the framework of the eWpG has already created the option for German special funds to issue fund shares in electronic form, which eliminated the need for a physical global document and enabled registration in a central electronic securities register, the introduction of the eWPG did not yet provide for crypto fund shares (i.e. electronic fund shares, which were not in a central register but in a decentralized register central crypto securities register are entered) to be issued. This was changed with the introduction of KryptoFAV.

Contents of the KryptoFAV

Difference between electronic fund shares and crypto fund shares

Crypto fund shares are not entered in a central securities register like electronic fund shares, but in a crypto securities register. Section 16 paragraph 1 eWpG states that crypto securities registers must be kept on forgery-proof recording systems. Distributed ledger technology (e.g. in the form of a blockchain) is suitable for this purpose.

Scope of the KryptoFAV

Registrar in accordance with KryptoFAV

The KryptoFAV deviates from the regulations of the eWpG in the case of the registrars. It states that in the case of crypto fund shares, only the depositary and companies commissioned by it that have a license to maintain crypto securities registers are eligible as registrants. However, the depositary must ensure that it can comply with legal obligations even if such an assignment is made.

Benefits of crypto fund shares

No central securities depository required to settle share certificate transactions for crypto fund shares

No central securities depository

No interaction with the central securities depository when processing fund share settlements as well as during the sale and transfer of fund shares. In addition, no global certificate need to be issued.

Direct trading of securities in the form of crypto securities and crypto fund shares between investors.

Direct trade between investors

Investors can interact with each other directly in legal transactions.

Advice for asset management companies and depositories

Shorter processing of property rights

Significant reduction in the effective date (T+2) for processing the ownership of the transaction.

Real-time settlement of crypto securities and crypto fund shares

Real-time settlement

Settlement can be conducted on the same trading day (T+0).

Our consulting services in the areas of MiCAR, DLT pilot regime, crypto custody, crypto securities registry management and many other areas.

How do we support you?

FinPlanet is your one-stop shop for the topic and crypto fund shares and eWpG!
We provide you with full consulting from an initial assessment to potential implementation. In particular, our support includes the following services:

  • Assistance in analyzing your advantages and disadvantages of using crypto fund shares;
  • Workshops;
  • Review and optimization of your internal processes with regard to requirements;
  • Support for new product processes in accordance with the German MaRisk AT 8.1 (”NPP“);
  • Development of a target operating model;
  • Adjustments of your written guidelines;
  • Assistance in the selection of service providers;
  • Project management;
  • And many more...
*The information was prepared by FinPlanet based on public information. FinPlanet does not guarantee the completeness or accuracy of the information. In particular, no legal advice is provided.

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