According to a recent report, a bill which is meant to provide a legal framework for securities issued over blockchains (Blockchain Securities) has been passed by the European nation of Luxembourg on the 14th of February after 58 members voted in support of the legislation and only two voting against.
Legal Certainty for Blockchain Securities
The bill tagged Bill 7363 is aimed at offering financial market participants legal certainty regarding the issuance of securities using blockchain technology. While speaking about this, the chamber said: “The bill should provide greater certainty for investors and make the transfer of securities more efficient by reducing the number of intermediaries,”
Furthermore, in April of 2013, Luxembourg via an amendment of a securities law passed in 2001, passed a bill which made it possible for it to legally issue “dematerialised securities”.
Also, while putting into consideration technological developments that have taken place in recent years, the chamber further said that new bill is another amendment to the law which was passed in 2001 as it includes the registration and distribution of securities while making use of secure electronic registration like distributed ledger technology and more importantly blockchain technology.
Also, the amendment included Article 18a to the law. The amendment states that:
“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 does not affect the fungible nature of the securities concerned.”
Blockchain Securities has the Same Status With Traditional Securities
Before the bill was passed, a document was released which revealed that blockchain securities have the same status as other traditional securities present under the bill. The document states that for securities issued over blockchain,“ 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.”