France beat other European countries to the draw. On 8 December 2017 an Order was given by the French President to allow non-listed securities to be issued on a blockchain. The Order is yet to be ratified by the French Parliament and will enter into force on 1 July 2018 at the latest. After Delaware, France thus becomes the second jurisdiction to enact legislation expressly allowing companies to issue cryptoshares. Other jurisdictions are expected soon to follow.
The French Order differs from the Delaware Bill in two main respects:
- Unlike the Delaware Bill, the French Order only allows for the issuance of non-listed securities on a blockchain.
- Unlike the Delaware Bill, the French Order is not limited to shares, but also permits the issuance of securities other than shares (such as bonds or units in collective investment undertakings).
The French Order also has at least two things in common with the Delaware Bill:
- Like the Delaware Bill, the French Order is limited to minimal additions to the existing legal framework. Words and phrases are surgically added to the French Monetary and Financial Code and the French Commercial Code.
- Like the Delaware Bill, the technical framework of the French Order is yet to be worked out. An implementing decree will need to be adopted in order to specify more detailed requirements of DLT-platforms used for issuing cryptosecurities.
The French Order expressly provides that cryptosecurities will be eligible to be pledged according to the same procedure as book-entry securities. The implementing decree will need to specify how that will work.
The French wouldn’t be the French if they wouldn’t have come up with a French translation of distributed ledger technology: “dispositif d’enregistrement électronique partagé”. Although its acronym is far catchier: “DEEP”.