France Issues New Ruling for Mini-Bonds Trading on Blockchain Platforms
The French government has passed a new ruling authorizing the use of distributed ledger technology for the issuance of mini-bonds and recording of trades. The new statute not only gives a clear definition of blockchain technology in French law, it also recognizes the technology as a recording tool that can be used for the transfer and authentication of ownership titles while providing legal validity to mini-bonds issued and traded via a blockchain infrastructure.
The statute (no 2016-520, April 28, 2016) defines blockchain technology as a “shared electronic recording system allowing for authentication.”
It states that the issuance of mini-bonds can be recorded on a blockchain “under conditions fixed by a decree in Council of State.”
“In this case, the bonds can be sold under appropriate modalities: the recording of the sale operation in an electronic shared recording system proceeds to the transfer of the ownership title,” it reads.
The statute also mentions the requirement for a working group that would “determine the conditions for the realization of such project.” The working group would also be responsible for “insuring that the [proposed infrastructure] is secure and mature enough to handle a digital distributed ledger that is reliable, secure and auditable.”
The ruling is part of a broader initiative by the French government aimed at boosting the domestic crowdfunding sector by proposing regulatory measures for fostering the use of alternative funding methods for debt-based instruments such as mini-bonds.
In March, the French Minister of Economy, Emmanuel Macron, attended the third annual meeting of the French crowdfunding association, an event hosted at the Ministry of Finance which attracted nearly 500 participants.
Macron praised the development of the French crowdfunding sector, which he said acts as “an innovation laboratory preparing France for a more open, more technology-based, more decentralized economy.”
The ordinance comes at a time when French banking giant BNP Paribas is exploring the merits of blockchain technology for securities trading.
In April, BNP Paribas Securities Services, a wholly-owned subsidiary of the BNP Paribas Group, announced a partnership with SmartAngels, a French crowdfunding platform for SMEs, to develop a blockchain-enabled trading platform to enable private companies to issue securities.
The two firms are working on a pilot expected to be launched in the second half of 2016.
BNP Paribas is also one of the key sponsors of the Viva Technology international summit, a major tech event occurring in Paris from June 30, to July 02, during which BNP Paribas,along with AXA and EY, will be hosting a number of open innovation challenges focusing on creating various products and solutions that utilize blockchain technology.