Saturday, December 4, 2021

Blockchain-Friendly France Changes Laws to Transform Securities Trading

Blockchain-Friendly France Changes Laws to Transform Securities Trading

French finance minister Bruno Le Maire on Friday revealed an order permitting the trade of unlisted securities using blockchain record-keeping. Adopting the new laws to accommodate the change will make France the first country in Europe allow trading through the tamper-proof technology.

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The French government has opened the gates for fintech companies to trade non-listed securities via blockchain platforms.

The new legislation will only apply to unlisted financial securities such as unlisted stocks and bonds, hedge funds, and mutual fund shares that do not fall under E.U. law. The non-listed market estimates to over €3 trillion EUR. Le Maire said:

“The use of this technology will permit fintechs and other financial actors to offer new solutions for exchanging securities, solutions that are faster, cheaper, more transparent and more secure.”

In recent times, blockchain technology has become a new buzzword for sealing trust while making deals. The technology’s initial aim was to cut out the middleman and transfer funds to unknown people on the internet in a faithful manner.

‘Pro-Blockchain’ Government

The new French government could be called a “pro blockchain” government. In the past, French president Emmanuel Macron has described how blockchain technology could be implemented in the securities market.

french flag Macron said: “Financial regulation to allow experimentation of blockchains dedicated to the market of bonds… If the experimentation is conclusive, the government could extend it to unlisted securities in order to promote the emergence of an SME exchange.”

For a year, French authorities have been working to modify securities law to introduce blockchain technology in the markets. In March this year, French Treasury initiated public sessions associating employment of the technology and its impact on securities regulations.

On September 19th, 2017, Treasury published a reform strategy to form new legislation. Hence, France is the first European country with a legalized framework regulating the use of blockchain technology. The new rule is a step towards to larger initiatives.

Steven Maijoor, Chairman of the E.U.’s European Securities and Markets Authority, said: “We are systematically looking into financial innovations, looking at risks and looking at opportunities and how they fit into laws and regulations.”

New Reform Is on the Way

The platform will allow startups and investors to try trading on a live platform. Le Maire said: “the decree is a way of telling firms ‘come do live tests here, in a secure legal framework’.” The technology also aims to make trading more secure, and quicker.

The only downside of the new regulation is less employment for brokers, as the futuristic space has no room for middlemen. Although, it will still be obligatory for the listed securities to go through clearinghouses and custodians.

Fintech companies also expressed some uncertainty about accepting the new record-keeping technology. Additionally, there were fears tech enthusiasts in finance wouldn’t endorse blockchain, due to the absence of definite regulations. That’s likely to change as the government’s current direction seems to promote the technology.

France’s Central Bank Also Likes Blockchain – but Not Bitcoin

Additionally, the French Central Bank is keen to use Bitcoin’s underlying technology — but not the cryptocurrency itself. In February this year, it started an innovation lab which plans to team up with blockchain startups.

Recently, Bank of France governor Francois Villeroy de Galhau warned people investing into bitcoin “do so entirely at their own risk”.

France is not the only country to take such an initiative. Soon, the Australian Securities Exchange will switch to a newly-developed blockchain platform allowing more secure transactions.

In the United States, CBOE Global Market Inc. and CME Group Inc plan to launch Bitcoin futures by the end of the year. In July, Italy’s only exchange — Borsa Italiana, was testing a blockchain platform to issue shares for unlisted companies.

The new reform will ensure growth in fintech startup companies, potentially transforming Paris into a modern financial hub of Europe.

Will all markets and exchanges adopt blockchain soon? Let us know what you think.

Images via Pixabay

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