Different countries have a mixed outlook toward the crypto industry, with many nations having a conservative stance and some making efforts to embrace the benefits of this nascent industry. It’s always intriguing to follow what different governments think about the crypto assets, and their potential to change the global economy.
Last week, Luxembourg, which is one of the countries supportive of the crypto concept, rolled out a legal framework to regulate the securities issued on the blockchain network. The new bill which comprises the framework was passed in the Luxembourg Parliament, with 58 members voting in favor of the legislature.
According to the official document, the bill 7364 aims to “provide financial market participants with legal certainty for the circulation of securities via blockchain technology.” Further, it reads that the bill aims to provide better protection for the investors while creating the “transfer of securities more efficient by reducing the number of intermediaries.”
Secured Blockchain Transactions Made Possible
The new law will play an important role in bringing transparency to the markets. Essentially protecting blockchain transactions, which in turns, gives them the same legal consideration as traditional transactions.
The article 18a which was especially included in the amendment read:
“Account-keeper may hold securities accounts and make registration of securities in securities account within or through secure electronic registration devices, including distributed electronic registers or databases. Successive transfers recorded in such a secure electronic registration device are considered like transfers between securities accounts.
Holding of securities accounts within such a device secure electronic registration or registration of securities in securities account through such a secure electronic device do not affect the fungible nature of the securities concerned.”
Crypto Community Stands in Favor
Although Luxembourg is a small landlocked European country, it has stood out as a great example of innovation, growth, and stability. Also, many corporations consider the country as the post-Brexit option for investments and new opportunities.
The community of crypto enthusiasts in Luxembourg have no problems with the recent passing of the bill by its government. Nasir Zubairi, the CEO of Lhoft asserted:
“Though some would suggest that existing regulation was adequate, the new rule is welcomed in that it provides clarity on the settlement of securities by blockchain, removing ambiguity for Fintech firms and traditional institutions who are looking at blockchain/DLT technologies as a means for reducing cost and optimizing securities processes.”
The growth of Securities Token is on the rise, as the global regulators continue imposing stringent regulations on the tokens issued via Initial Coin Offerings (ICOs). Such a transition has made many companies take the STOs route for introducing their digital tokens. With regulatory perils out of the way, STOs ensure investors’ safety, which is still not the case with the ICOs.
Whereas, the Luxembourg Financial Regulator CSSF issued a warning in March, against crypto and ICOs investments. The regulator noted that cryptocurrencies are not supported by any central bank, and are vulnerable to volatility. Further, emphasizing the issues of business models and transparency.
