FRANCE Law and Practice Contributed by: Hubert de Vauplane and Hugo Bordet, Morgan Lewis & Bockius LLP
Furthermore, since March 2020, the BdF has partnered with private sector innovators (such as Accenture, Euroclear, HSBC, etc) to conduct a programme of eight experiments on a wholesale CBDC, such as using a wholesale CBDC to set - tle an issuance of digital financial securities with Société Générale Forge. On 8 November 2021, the BdF published the results and key findings of its experiments. Finally, Paris Europlace, which is a think tank that brings together and represents the diversity of players in the financial industry and provides reports and advice, wrote a report in response to the European digital euro project in which it highlighted the potential uses of blockchain in the financial industry and the economic, techni - cal and legal challenges. 10.2 Local Regulators’ Approach to Blockchain While French regulators have issued multiple warnings concerning the risks of crypto-assets, the treatment of blockchain technology has been much more favourable. Blockchain tech - nology is widely regarded as a major innovation which will likely transform the financial industry, and may also transform other industries (such as supply chain, identity management, health - care, etc). More specifically, in October 2018, the CNIL issued a report on the compatibility of blockchains with the GDPR, and in December 2018, a parliamentary working group published a report on blockchain technology. Government Decrees However, the major step was the publication of the government decrees of 8 December 2017 and 24 December 2018, which allow the use of a blockchain (formally called “shared electronic recording system” ) for the issuance, registration and transfer of unlisted equity and debt securi -
ties. Securities issued through a blockchain will still qualify as financial instruments, and this new regime will not allow the creation of “security tokens” . Pilot Regime The DLT Pilot Regime, which came into force in March 2023, is a set of rules designed to sup - port the deployment of DLT in financial markets. It facilitates the issuance and trade of certain financial instruments on DLT market infrastruc - tures, which benefit from limited exemptions from certain financial regulations such as MiFIR, MiFID II and the Central Securities Depository Regulation. This framework applies in particular to smaller financial instruments such as equities with a market value of less than EUR500 mil - lion, bonds with an issue amount of less than EUR1 billion and investment funds with assets under management of less than EUR500 million. The purpose of the DLT Pilot Regime is to foster innovation and foster the growth of DLT-based market infrastructure, while maintaining neces - sary protections for investors and financial sta - bility. The entry into force of the Pilot Regime has been prepared by both regulators and major financial institutions which plan to offer services based on that new framework. The HCJP published a report on digital securities in 2022, in order to prepare the adaptation of French law to the Pilot Regime. In March 2023, an act effectively modi - fied the French Monetary and Financial Code to facilitate the use of the Pilot Regime by French entities. On 31 May 2024, the HCJP published a report titled “On the determination of the law applica- ble to assets registered in distributed ledgers” . It made several proposals, one of which con - cerned the law applicable to financial securities
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