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France Moves Forward With Blockchain for Certain Securities Exchanges

Following the adoption of Act no.2016-1691, dated 9 December 2016, on Transparency, Anti-Corruption, and Modernization of Economic Life (“Sapin II” – see our compliance coverage here) and the publication of its responses to a public consultation request on 30 August 2017 (see our coverage here), the French Ministry of Finance published a draft document aimed at adapting the French legal framework to the use of blockchain technology.

The draft (which may be accessed in French here) addresses the possibility for companies, to register the following instruments with a “shared electronic registry”:

  • Negotiable debt securities;

  • Units or shares of undertakings for collective investment;

  • Capital securities issued by corporations and debt securities other than negotiable debt securities, provided that they are not traded on a trading platform.

The draft places conditions on such registration. The draft expressly excludes registration of any securities admitted to the operations of a central depository or delivered in a system for the payment and delivery of financial instruments. In addition, the bylaws of the issuer must expressly provide for the possibility to use a shared electronic registry.

In any case, the French regulatory framework would require the application of French law to any securities registered with a shared electronic registry if the issuer of such securities is headquartered in France or the issuance of such securities itself is already governed by French law.

Additional technical measures will subsequently be discussed in a supplementing Decree, in order to provide the required legal safeguards to blockchain technology.

While assessing the relevance of a blockchain legal framework for corporate securities remains difficult in the absence of such technical details, all industry actors are welcome to provide the Ministry of Finance with comments on the proposed framework until 9 October 2017.

Copyright 2020 K & L GatesNational Law Review, Volume VII, Number 282



About this Author

Claude-Étienne Armingaud, KL Gates, Paris, data protection lawyer, commercial contracts attorney

Claude-Etienne Armingaud’s practice focuses on the representation of public and private companies in the area of information technologies and intellectual property law. Mr. Armingaud provides counsel to his clients at all stages of their corporate life cycle and in wide-ranging transactions, including in connection with litigation compliance matters, intellectual property protection and development, data protection strategic operations, and other commercial contracts.

Mr. Armingaud regularly advises start-up companies in matters relating to...

Emilie Oberlis, New York, Investment Management, Hedge Funds, Alternative Investments, Exchange traded funds, KL Gates, Securities, Blockchain, FINRA

Emilie Oberlis is an associate in the firm’s New York office where she is a member of the Investment Management, Hedge Funds and Alternative Investments group. Ms. Oberlis focuses on the asset management industry, advising U.S. and non-U.S. registered and private funds, ETFs, investment advisers, broker-dealers and other financial services organizations on regulatory, compliance, governance and enforcement matters. 

Ms. Oberlis has extensive experience registering U.S. and non-U.S. investment advisers with the SEC and advising them on ongoing...