United States: France Adds The Missing Piece To The Law Allowing Blockchain Technology To Be Used To Register And Transfer Unlisted Securities

The notion of distributed ledger (formally denominated "shared electronic recording system, or DEEP in French) was first introduced to French law in 2016 by Ordinance No. 2016-520 of April 28, 20161(the "Minibon Ordinance"), which allows its use for the purpose of recording the issuance and sale of minibons (a class of short-term debt instrument dedicated to the financing of SMEs). 2 Ordinance No. 2017-1674 of Dec. 8, 20173 (the "DLT Ordinance") took a further step by extending to other securities (mainly unlisted equity and debt securities) 4 the possibility of using distributed ledgers for the issuance, registration and transfer of such securities, instead of traditional securities accounts. It should be noted that such securities would not be security tokens (as this term is generally understood in the cryptocurrency and blockchain community), but rather tokenized securities.

Using a shared electronic recording system to issue, register and transfer various kinds of unlisted securities was then theoretically allowed in France. However, both ordinances provided that the technical requirements (that is, the level of security and authentication) of the shared electronic recording system would have to be specified by a decree to be passed by the French government. The DLT Ordinance also provided that the decree should determine how securities registered on a distributed ledger could be effectively pledged.

The much-awaited decree was finally published on Dec. 24, 20185 (the "DLT Decree").

I. Technical requirements of the distributed ledgers used to issue, register and transfer unlisted securities

The DLT Decree requires the distributed ledgers used to register securities to comply with four technical conditions:

  • The distributed ledger must be "conceived and implemented" in a manner which preserves the integrity of the information recorded.
  • The distributed ledger must allow "directly or indirectly" the identification of the owners of the securities. It must be possible to determine the nature and quantity of the securities held through the distributed ledger.
  • A business continuity plan, which includes an external data recording system, must be set out.
  • The owners of the securities registered on the distributed ledger must be able to access statements of transactions.

The DLT Decree does not specify which of the issuer or its service provider will be responsible for the compliance of the distributed ledger with these technical requirements. In addition, the decree does not address the distinction between private and public blockchains. Although the decree does not exclude the possibility of issuing and registering securities through a public blockchain, complying with some of these technical conditions could be more complicated if a public blockchain is used. Coders and lawyers will have to work closely together to ensure that the distributed ledgers used to issue securities are compliant with French law.

Further, when an issuer hires a service provider to operate the distributed ledger used to register its securities, the identity and address of such service provider, as well as the nature of the securities, must be disclosed by the issuer in the Bulletin of Mandatory Legal Announcements (Bulletin des annonces légales obligatoires).

II. Provisions related to the pledging of securities registered on a distributed ledger

The DLT Decree also revises the rules applicable to the pledging of securities, to allow securities registered on a distributed ledger to be effectively pledged. The decree extends to these securities most of the existing provisions of the French Monetary and Financial Code related to traditional pledges of securities, and also creates two specific rules applicable only to the pledging of securities registered on a distributed ledger:

  • If the person in charge of registering the securities on the distributed ledger (that is, the issuer or its agent) is not authorized to receive repayable funds from the public, a regulated entity (for example, a bank or an investment services provider) shall be responsible for collecting any dividend related to the pledged securities.
  • The pledgor and the pledgee must agree on the conditions under which the pledgor is allowed to use the pledged securities and the cash contained in the pledged account.

Thanks to the DLT Decree, the French legal framework applicable to blockchain technology and crypto-assets is now more complete. After the adoption of a specific tax regime for crypto-assets (flat tax and exemption of crypto-to-crypto transactions) in the Budget Act for 2019 and the clarification of the accounting treatment of crypto-assets and initial coin offerings (ICOs) 6 by the French Accounting Rules Authority (ANC), another significant milestone will be reached when the Loi Pacte7 is passed into law. By the end of the first half of 2019, France could become one of the most advanced jurisdictions with respect to the regulation of blockchain and crypto-assets.


1 Ordinance No. 2016-520 of April 28, 2016 related to promissory notes (minibons).

2 Minibon Ordinance, Article 2; Article L. 223-12 of the French Monetary and Financial Code.

3 Ordinance No. 2017-1674 of Dec. 8, 2017 related to the use of a shared electronic recording system for the purpose of representing and transferring securities.

4 More specifically, the securities which may benefit from this new regime are the financial securities (titres financiers) which are not admitted to the operations of a central securities depository (that is, the securities which are not negotiated on a regulated market, a multilateral trading facility or an organized trading facility). In addition to unlisted equity and debt securities and minibons, they include the shares of collective investment undertakings and negotiable debt securities (titres de créance négociables).

5 Decree No. 2018-1226 of Dec. 24, 2018 related to the use of a shared electronic recording system for the purpose of representing and transferring securities and issuing and selling minibons.

6 Regulation No. 2018-07 of Dec.10, 2018.

7 Draft Law No. 1008 on growth and companies' transformation (Loi Pacte) of June 19, 2018 (France Set to Enact the First Regulatory Framework for Crypto-asset Intermediaries and France to Implement a Right to a Bank Account for Crypto-Asset Issuers and Intermediaries).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions