As part of discussions on the introduction of provisions to support the development of security tokens at domestic and European level, AMAFI’s Digital Assets Group examined a number of possible ways forward, which were summarised in a document (AMAFI / 19-105) sent to the AMF in late October. The goal, in AMAFI’s view, is to successfully implement an appropriate regulatory framework that protects investors without stifling technological innovation and its potential contributions.

With this in mind, AMAFI is recommending two parallel and complementary approaches.

At domestic level, conduct short-term (one-year) initiatives to build initial expertise in unlisted securities making sure, in view of their experimental nature, that these activities are not captured by standard financial regulations, which are too unwieldy and complex for the purpose. The aim would be to conduct trials that go beyond just security token issuance, which has already been done by Forge Capital and Santander, notably with a view to trading securities on a secondary market.

At European level, efforts should encompass the medium term (between two and five years) and the long term (between five and ten years). To enable experimentation, observation and analysis of practices related to the specificities of security tokens, consideration should be given to the construction of a specific regime, limited in time, by which national authorities could grant exemptions from certain regulatory obligations, linked to the traditional financial instruments scope, non-compatible or unnecessary when applied to blockchain technology, to projects that do not present systemic risks.