The law provides a greater legal certainty and transparency with regard to the use of distributed ledgers or blockchain technology to facilitate the circulation of securities, and demonstrates Luxembourg’s proactive approach to production usage of blockchain technology. The bill is also geared to make the transfer of securities more efficient by reducing the number of intermediaries.
Titled Bill Number 7363, the new law amends the modified law of 1 August 2001 on the circulation of securities by introducing a new article 18bis, which states:
The account holder may hold securities accounts and proceed with recording the securities in these securities accounts within or by means of one or more secured electronic recording mechanism (dispositif d’enregistrement électronique sécurisé), including through one or more distributed electronic networks or databases. Successive transfers recorded within a secured electronic recording mechanism are considered equivalent to wire-transfers between securities accounts. The holding of securities account within, or the recording of securities in securities account through, a secured electronic recording mechanism does not affect the fungible character of the securities.
Neither the application of the present law, nor the location of the securities which are still held with the relevant securities holder, nor the validity or enforceability of collateral arrangements (sûretés ou garanties) granted in accordance with the modified law of 5 August 2005 on financial collateral contracts are affected by the holding of securities accounts within, or by the recording of the securities in securities accounts through, a secured electronic recording mechanism.
An unofficial English translation of the bill is available here.