The "Digital Lab", the AMF solution for a security token market

The French Financial Markets Authority supports the tokenization of the finance in Europe. To allow the emergence of market infrastructure projects security tokens, thereAMF proposes the creation of a Digital lab.

The French financial regulator wants to be one of the European leaders in digitalization of finance through the blockchain and the regulation of these new markets. In January,AMF thus advocated supporting tokenization and creating a framework for innovation.

The Authority makes a new proposal this time on security tokens after a legal analysis of the current regulations. She notes, for example, that European and national regulations "do not prevent the development of security tokens. "

Regulation excludes decentralized platforms

An activity, however, faces "major legal obstacles", namely security token exchange. And these barriers are justified by the very nature of blockchain technology, that is to say, decentralized nature.

The AMF notes, for example, that the negotiation of security tokens (reception and transmission of orders on behalf of third parties, execution of orders on behalf of third parties) through platforms would require them to have an identified manager.

Consequence: the creation of a real secondary market for security tokens, in the current state of regulation, would prohibit decentralized platforms.

To meet these challenges,AMF puts forward a proposal: create a European “Digital Lab” or digital laboratory, which it believes could “secure the delivery of financial securities on the blockchain. "

The Digital Lab, a right to experimentation with exemptions

This Lab would consist of a exemption device. Concretely, national regulators could exempt companies from certain regulatory obligations, incompatible with blockchain. With a counterpart however.

This exemption would be granted on condition that the entity benefiting from it complies with the key principles of the regulations and that it is subject to increased surveillance, ”said the AMF.

Such a laboratory or right to experimentation would thus be favorable to the emergence of security token market infrastructure projects thanks to the establishment of a secure legal environment.

The French Authority proposes to accompany this system with a monitoring mechanism at European level. At the end of this three-year experimental phase, and thanks to "the expertise acquired", adjustments to European financial regulations could be envisaged.