By eliminating intermediaries such as custodian
banks and brokers, the new rules allow banks and fintech companies to establish
blockchain platforms for instant unlisted security trading. Securities listed
on financial exchanges, however, will still be required to pass through
custodians and clearing houses.
“The use of this new technology will allow fintech firms and
other financial actors to develop new ways of trading securities that are
faster, cheaper, more transparent and safer,” said Finance Minister Le Maire in
The French government has exhibited a growing interest in
blockchain technology, particularly given the interest in attracting fintech
activity to Paris — and away from London — in the aftermath of Brexit. However, until now, the country had failed to show any meaningful
initiatives proving their commitment in this industry.
France is not the only country pursuing this
course; the Australian Securities Exchange is also reportedly seeking to transition to a new blockchain
platform in order
to allow more secure transactions for its customers.
While the French Central Bank appears set to
embrace blockchain technology, it has not shown a similar interest in Bitcoin,
the technology’s original and arguably most innovative and fastest-growing
application. This disregard is underscored by recent comments from the governor of the Bank of France suggesting that
those seeking to invest in bitcoin were doing so at their own peril.
Peter Lazaroff, co-chief investment officer at Plancorp, a U.S.-based, SEC-registered investment advisory firm, sees
Bitcoin as a volatile asset in today’s market. According to Lazaroff, Bitcoin
is heavily valued on investors’ assessments of its future worth, as, unlike
with traditional investments, there aren’t dividends or interest rates.
Lazaroff believes that France’s announcement
reflects the growing awareness that blockchain technology is about so much more than cryptocurrency. He asserted that governments and central banks are
exploring ways to digitize their currencies, while financial institutions are studying
ways that blockchain technology could streamline operations.
“France is the latest example of exchanges
incorporating blockchain technology, but exchanges all over the world have been
working to incorporate this technology the past few years,” Lazaroff said. “NASDAQ
has been at the front of the pack, introducing blockchain ledger technology in
2015 to record transactions in privately held securities and eliminate the
liquidity challenges that typically come with such holdings. Other exchanges
that have been working to incorporate blockchain include Australia, Japan,
Germany, South Korea, India, Russia, Chile, Canada and the United Kingdom.”