France becomes the first country to allow trading of securities via blockchain
Emmanuel Macron signed an ordinance which allows by law the use of the blockchain for unlisted securities.
Motivated by the desire to strengthen Paris financial marketplace after the Brexit, France became the first European country to provide a legal framework for the securities exchange via the blockchain.
The Treasury Department has worked for a year on this project authorized by the Sapin 2 law. The ordinance makes several amendments to the Monetary and Financial Code. The main change consists in proposing the blockchain as a new technology for the registration and transfer of unlisted securities, i.e. fund units, unlisted shares and bonds, and negotiable debt securities (the total market represents more than 4,000 billion). Previously, these assets had to be materialized by a securities account. Now, with equal legal value, they can be registered directly on a blockchain and then exchanged without going through intermediaries such as account keepers, custodians or central depositories.
No regulations on which blockchain to use has been set, the government wishes to leave the choice to the respective Fintechs.
"The use of this technology will enable fintech and other financial players to offer faster, cheaper, more transparent and safer solutions," said Bruno Le Maire, the Minister of Economy, on Friday.
Several solutions could be marketed in the first half of 2018 when the decrees implementing the ordinance will be issued. These will define the technical modalities, such as the traceability of the security ownership, the framework of the settlement system (probably in money issued by the central bank and not in Bitcoin), etc....
"Alongside with green finance and crowdfunding, our aspiration is that blockchain solutions turn into a new pillar of the financial innovation in Paris," said Bruno Le Maire.