Luxembourg Gives Blockchain Securities Legal Status

In the latest blockchain news, the European nation of Luxembourg has made a progressive decision in the crypto space. That is because it reportedly passed a bill that would provide a legal framework for securities issued over blockchain. Here is everything about it in a nutshell.

Providing Legal Certainty

According to a notice released Thursday, the country’s very own Chambers of Deputies, which is basically the country’s parliament, passed a bill on February 14. Interestingly, the bill acquired at least 58 members, all of whom pledged their support towards the legislation. There were two that reportedly voted against it.

Called Bill 7363, the legislation is designed to provide all participants in the financial market the much-needed legal certainty for issuing securities. The latter, in particular, refer to those that involved the use of blockchain technology.

The chamber reiterated that the bill should be able to provide greater certainty for all investors. At the same time, it can be of huge help when it comes to making the transfer of securities more efficient. It added that this would be made possible by significantly reducing the number of intermediaries.

Luxembourg, which is an EU member country, passed a bill and, thus, making it possible to legally issue the so-called “dematerialized securities” back in April 2013. This was done via an amendment of a securities law, which was said to have been passed back in 2001.

Amending the 2001 Law

Considering all technological developments in the past few years, the chamber suggested that the new bill would further amend the 2001 law. And by doing so, it would subsequently include the registration and distribution of securities by utilizing a more secure electronic registration. This would include the likes of distributed ledger technology and the more popular blockchain technology.

Specifically, the amendment is expected to add Article 18a to the law. It basically states that “account-keeper” is to hold securities accounts and, more importantly, make registration of securities in either within or via secure electronic registration devices.

A document believed to be proposing the bill before to its expected passing suggests that blockchain securities come with similar status as traditional securities under the aforementioned bill. It states that, for securities directly issued over the said technology, the token concept is without a doubt the easiest one to use. This is said to be from the technological point of view, but when viewed from a legal standpoint, it would arrive with the similar rights as standard dematerialized securities.