FINTECH WORKING GROUP REPORT APRIL 2018
The Paris EUROPLACE Blockchain working group took on the task of studying the effects of blockchain technology on two financial activities: asset management and the activities of depository / custody account keeping. This decision was prompted by the importance of the consequences that this new technology may have on these activities, particularly as France hosts important international players in these areas. Additionally, the consultation launched concomitantly by the French Treasury on the adaptation of French law to blockchain technology in the area of securities law assured this working group of the pertinence of their decision.
The present report’s scope surpasses that of the French domestic context and the consultation launched by the Treasury on securities law. It is worth noting that France is one of the first countries in the world to legislate on the use of blockchain in post-trading activities and securities law. The adaptation of French law concerning this new technology has not resulted in a new branch of law, but rather has expanded general principles concerning civil and commercial law, in turn allowing for the majority of legal questions around blockchain to be resolved. French law has in fact adapted to this technology, notably with regards to the notion of ‘securities trading account’, the redefinition of which was required.
More fundamentally, the working group is of the opinion that the object of regulation ought not to be a technology or an infrastructure in itself, but rather their uses.
With particular focus on asset management, the most effective use of blockchain technology is paving the way for a fundamental change in the form of units and shares in collective investment funds in France, changing from bearer securities to registered securities. This is not without consequences for securities issuers which are as a result required to carry out a considerable amount of verifications themselves and to take on direct responsibility for administrative and fiscal procedures.
As far as securities law is concerned, this analysis concludes that the adaptation of the existing law on unlisted securities is sufficient to allow for the use of blockchain technology.
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