Always interested in ever-more centralised financial regulation in the European Union, the French Autorite? des Marche?s Financiers is lobbying for an EU-wide 'digital lab' to enable national regulators to waive certain rules relating to the settlement of securities.

The AMF sees the issuance of financial instruments on a blockchain as the future and wants to remove various legal obstacles to the development of security tokens (a tokenised, digital form of traditional securities). It also has a few proposals for trading platforms and bulletin boards.

Besides Initial Coin Offerings or ICOs, which are public offers of tokens governed by the French PACTE (Plan d'Action pour la Croissance et la Transformation des Entreprises) Law, traditional firms and firms in the blockchain ecosystem have shown strong interest in Security Token Offerings (STOs) and, more generally, in registering financial instruments on the blockchain.

On the subject of the issuance of security tokens, the AMF believes that the EU's Prospectus Regulation is probably compatible with STOs. In the area of asset management, it says, EU and national regulations do not prevent the development of security tokens. Asset managers who want to go in for this in France must apply to the AMF for permission.

However, the exchange of security tokens faces major legal obstacles in the French regulator's eyes because of the decentralised nature of blockchain technology.

The trading of security tokens might be subject to EU regulations already. The European Regulation for Central Securities Depositories (CSDR) and the Finality Directive, however, do not allow for full settlement in the blockchain.

Platforms might, in time, perform certain investment-related services that involve security tokens (reception and transmission of orders, execution of orders on behalf of third parties) by applying to be licensed as investment services providers (ISPs) or financial investment advisors (FIAs), but for this they need to identify managers and this stipulation excludes decentralised platforms.

The regulator states: "To offer a genuine secondary market for security tokens and operate a trading platform within the meaning of MiFID II, authorisation as a multilateral trading facility or organised trading facility would be required, which also excludes decentralised platforms.

"As for the delivery of securities against payment (settlement), although it is already possible for unlisted financial instruments due to the Blockchain Order of 8 December 2017, it poses major difficulties for other security tokens."