The law of August 1st 2001 (the “2001 Law”) on the circulation of securities and other financial instruments was already, historically, an important step towards the modernisation of financial sector legislation.
The modernisation was launched and a further significant step was taken in 2013 with the adoption of the law of April 6th 2013 on the dematerialization of securities amending the 2001 Law.
As modern technologies are evolving at a dizzying pace, it has not been necessary to wait for long before a new bill (“PL7363”) was filed to further amend the 2001 Law with the view to take into account these technological developments related to the blockchain.
PURPOSE OF PL7363
The purpose of PL7363 is to extend the scope of the 2001 Law to allow account holders to hold securities accounts and make registrations of securities through secure electronic recording devices including distributed electronic registers or databases such as blockchain.
Secure electronic recording devices are at the centre of operations and may be used by account holders to maintain securities accounts and make registrations, i.e. issues and transfers.
Fungibility within the system remains complete through the use of tokens (which can be defined as digital assets stored in a blockchain, which like a security or dematerialised security, represent the security) which are fungible by nature within the blockchain.
Although there is not yet any text in Luxembourg relating to token or blockchain, the Luxembourg legislator, by filing PL7363, aims to put Luxembourg law at the forefront of technological progress.