We caught an interesting interview on French network LMD TV about security token progress in France and Europe. This interview is with honorable guest Stéphanie Babossioras – Assistant Director of Legal Affairs for the AMF (Financial Market Regulator) as well as Jennifer D’Hoir senior advisor for the Gide 255.
Hello and welcome to Le Monde du droit. Today we’re going to talk about the Security Token.
Q: So what is a security token ?
A: So a security token is a financial instrument which registers on the blockchain. It is an action, an obligation, a share of funds or a by-product.
It’s a title which give rights of financial nature or to governance rights and it registers on the blockchain which is a peer-registries technology.
That means it’s a way of holding a register without any centralized content
Q: So now that we know what a security token is… What is his legal framework Jennifer?
A: So really there isn’t anything really new regarding it’s legal framework since, like Stephanie said, we’re talking about financial instruments.
It’s a notion which is defined by the MIF(Multilateral Exchange Fees) and which has been transposed into a French Right.
The concept isn’t new. However the fact that we began using a new technology emphasized some blockages in the law which may be applicable to it.
Whether it’s about national right of title or the whole financial law that applies to it.
Q: So how is this framework evolving ?
A: This framework has been subject of different analysis in order to identify potential blockages with the use of blockchain technology in order to register financial instruments.
At an European level, the ESMA(European Securities and Markets Authority) has published a study about a year ago, where it identified the main points that will be subjects to potential blockages at a national level.The AMF also had a look on some issues that may have to be modify.
Q: So as you mention the AMF. Isn’t The AMF job suppose to remove those legal blockages?
A: So the AMF has 2 roles. First it’s goal is to help the actors , to support them in their projects and to specify the constant law legal framework that applies to them. That is why we’ve published, last Friday, a position which gives clarifications about negotiation platforms and notice boards.
Secondly the AMF’s mission is to support actors and remove regulatory obstacles.
We’ve also published last Friday a detailed legal analysis on the applicable framework and we are suggesting the European institutions to create a European digital laboratory that would allow some experimentations by removing certains legal constraints with the appropriate guarantees.
Q: So we see a lot of opportunities at first glance. What are both your feelings on the subject ?
A: A lot of potential! We do see it because the stock exchange actors, the financial players, are testing this new technology, whether it’s the big banks using blockchain to issue financial securities, or investment projects that are taking place to exchange financial instruments in a new way.
So there is potential that needs further testing because the projects are still in an experimental phase awaiting for opportunities thanks to that technology.
As for us in the AMF we estimate that blockchain technology is showing efficiency on all markets and that is why we want to support it. We want to accompany it’s development and manage risks in the most appropriate way there is.
What an exciting interview! A big thank you to AMF for their work pushing the security token framework forward and DDP for a informative view into France’s regulation towards digital securities.
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