Germany Adopts Blockchain Strategy while Warning Against Libra

Germany has become one of the first countries in the world to adopt a blockchain strategy for its economy. The strategy document was released this morning and covers a broad swathe of topics dealing with the use of blockchain and Decentralized Ledger Technology (DLT) in industries.

It is aimed at providing a framework of operations for companies and industries to incorporate the technology and minimize risks, such as those related to privacy, associated with it.

“We want to be at the forefront and further strengthen Germany as a leading technology location,” Finance Minister Olaf Scholz said. “At the same time, we must protect consumers and state sovereignty.”

He also sounded out a warning to Facebook’s proposed Libra cryptocurrency. “A core element of state sovereignty is the issuing of a currency, we will not leave this task to private companies,” he said.

European regulators have delivered several broadsides against Libra this past week. France’s finance minister Bruno Le Maire, who was among the proposed crypto’s earliest critics, repeated his warning last week. Francois Villeroy de Galhau, a member of the European Central Bank, added to the chorus and said that Libra would face a “tough regulatory climate” when it launches. In response, Libra chief David Marcus laid out a case for the coin on Twitter, claiming that it would be beholden (as opposed to dictating) to government monetary policy.

About Germany’s Blockchain Strategy

Germany’s blockchain strategy document is fairly comprehensive.

In addition to security risks stemming from the technology, it is also discussed legal requirements for design of blockchain applications. Not surprisingly, it also discusses consumer protections possible with blockchain. While it discusses the benefits of increased privacy through decentralized systems, the document also mentions the inherent risks from unregulated systems that do not incorporate international AML and KYC laws. Specifically, it encourages adoption of blockchain in systems, such as the food chain industry, which rely on provenance and origins of their raw materials for quality.

The document cautions against ICOs but also describes utility tokens as a “high potential” industry in the next five years. According to the strategy document, the government should provide “legal certainty” for investor protections for such offerings to encourage their use.