France to Open the Door for Blockchain-based Platforms
According to recent reports, the French government has opened the door to allow fintech companies and banking institutions to begin trading unlisted securities on Blockchain technology-based platforms.
The change comes with a desire to have France grow in its international reputation as a center for finance and technology, hopefully competing with the neighboring London, which currently enjoys a much bigger presence in the fielWd. According to a statement by Finance Minister Bruno Le Maire:
“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.”
According to the statement, listed securities will still be required to pass through trust systems.
What does it mean?
The new rules mean that banks and fintech companies can set up blockchain platforms where unlisted securities can trade instantly, cutting out middlemen like brokers and custodian banks. Securities listed on financial exchanges 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,” Finance Minister Bruno Le Maire said in a statement.
Le Maire added that the new rules would be “another asset for Paris’ attractiveness as a financial center” as the sector seeks to put itself on the fintech map, where London currently looms large.
Eager to attract business from London after Brexit, the French government has already introduced measures to make Paris a more attractive financial center ranging from payroll tax cuts to a labor reform and promises to set up more international schools. Blockchain, which first emerged as the system underpinning cryptocurrency bitcoin, is a shared ledger of transactions that is maintained by a network of computers on the internet rather than a central authority. Financial institutions have been ramping up their investments in the nascent technology in the hope that it can help reduce the complexity and cost of some of their burdensome back office processes.
The announcement will provide increasing opportunities for banks and other companies to use Blockchain technology to cut out unnecessary mid-level brokers in financial trading. The technology has already been used by a number of large corporations for international business payments and other applications.