Finding common ground towards a universal regulatory instrument has long been one of blockchain’s most critical things to achieve before having the right to be called a truly “mainstream” technology. Once that is crossed off the list, the country or region in question will have a clearer, smoother path to adopt the approach in most everyday scenarios.
The latest country to make strides in that department is Luxembourg. The small, but stable and financially powerful European state just passed a bill that contains the legal framework for securities issued over the blockchain technology.
58 out of 60 Votes
A notice made public on Thursday, February 14th was the source of the positive development. Luxembourg’s parliament passed the bill on that very same day, with a noticeably lopsided result: Out of 60 eligible voters, 58 members chose to support the legal instrument and only a pair decided to vote against it.
The Bill 7363, as it has been titled, will serve as the legal foundation for providing those that participate in financial markets with the legal certainty for securities issuance by using the ever-opportunistic blockchain technology.
According to the country’s chamber, “the bill should provide greater certainty for investors and make the transfer of securities more efficient by reducing the number of intermediaries,” the chamber said.
Six years ago, in April 2013, the nation, a member of the European Union (EU,) passed a bill that made possible to issue “dematerialized securities” legally, as a result of an amendment of a legal instrument that regulates securities, active since 2001.
Since technology has sparked several changes across the legal landscape of countries, it is necessary to revise all regulations with frequency to make sure they include the latest gadgets, models, and tools of mainstream use. According to the chamber, the new bill “updates” the 2001 instrument to include the registration and distribution of securities that use secure electronic registration. A perfect example of that is the “distributed ledger technology and in particular blockchain technology.”
The Article 18a
Specifically, the amendment adds Article 18a to the law, which states:
The amendment in question includes the Article 18a to the instrument: “Account-keeper may hold securities accounts and make registrations of securities in securities accounts within or through secure electronic registration devices, including distributed electronic registers or databases. Successive transfers recorded in such a secure electronic registration device are considered like transfers between securities accounts. Holding of securities accounts within such a device secure electronic registration or registration of securities in securities accounts through such a secure electronic recording device do not affect the fungible nature of the securities concerned.”
According to a document proposing the bill before its passing, blockchain securities are equal, in status, to regular, traditional securities under the bill.
For blockchain securities, “the easiest way today is to use the token concept… This is from the technological point of view a new type of dematerialized security, but to which are attached from a legal point of view the same rights as classic dematerialized securities.”
By Andres Chavez