A bill has been passed by the European nation of Luxembourg which provides a legal framework for securities issued over blockchains. The country’s Chamber of Deputies, the parliament of the county passed a bill on February 14 with a total of 58 members standing in support of the legislation. According to the bill 7363, the bill intends to provide financial market participants with legal certainty concerning issuing of securities using blockchain technology.
According to the chamber, ‘The bill should provide greater certainty for investors and make the transfer of securities more efficient by reducing the number of intermediaries.’ One of the EU member nations, Luxembourg passed a bill enabling legal issuing of ‘decentralized securities’ in the year 2013 by amending security law passed in 2001. With developing technology in recent years. The government said the new bill further amends the 2001 law in order to include registration and distribution of securities with the use of secure electronic registration, ‘such as distributed ledger technology and in particular blockchain technology.’
The amendment also included article 18a the law which states ‘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.’
Before the passing of the bill, a document suggested that blockchain securities and traditional securities have the same status. The report further indicated 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.’