Banks and fintech companies in France would have the option of setting up a settlement system for unlisted securities based on the blockchain. This would open the door to instant settlement and selling of stocks and bonds that previously required slow systems of brokerages and specialized markets.
"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.
Until now, only the Russian Financial Ministry has allowed the creation of a blockchain-based settlement for commercial bonds, a lightly traded product with some difficulties in price fixing and easy transfers.
Dozens of fintech ICOs are also trying to create similar marketplaces, where smart contracts and tokens may help perform security trading and settlement, without relying on large market operators. While tokens themselves are not considered securities, there are many worldwide markets of OTC-traded stocks and bonds that could use an automatic process to achieve faster trading that is completely accessible and democratized.
France may be well-positioned to ride the next wave of technology, as it lines up with the largest European countries by the size of its tech industry.
At the moment, listed securities would still face severe limitations and would need to go through a financial intermediary, and officially listed stocks would not be available for trading through fintech platforms.
Financial institutions are currently working on creating proprietary blockchains, sometimes not even relying on the public blockchains and networks available through the presence of miners.
France is sitting on the fence when it comes to ICOs and cryptocurrencies. However, the country is open to fintech, aiming to become one of the preferred financial centers of Europe, after London becomes less accessible to cross-border finance after Brexit is completed.