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Security Tokens : Towards a suitable European regulatory framework

Adan (Association pour le développement des actifs numériques), working in concert with the Association Française des Marchés Financiers (AMAFI), the Association Française des Professionnels des Titres (AFTI) and Gide 255, Gide’s team dedicated to innovation, are today publishing a study on security tokens.

The purpose of the survey was to understand the position of market players, new entrants, and long-standing businesses, on their appetite for security tokens and the definition of an appropriate European regulatory framework. This initiative comes as the European Commission works to reform regulations applying to the crypto-asset market and as the French Financial Markets Authority (Autorité des marchés financiers, AMF) makes proposals concerning security tokens and the creation of a European digital laboratory.

Nearly 90 responses were received, thereby confirming the interest shown in security tokens as a form of financial instrument. They underlined the need for a specific regulatory framework and, more generally, formulated concrete recommendations for establishing a European “Digital Lab.”

Security tokens as an alternative to current financial instruments
The study shows that digital asset and blockchain industry players favor using security tokens – a sentiment echoed by incumbent players in the banking and financial sector. Respondents had diverse activities that concerned a broad spectrum of financial instruments. Furthermore, there are clear signs that the industry is maturing and no longer limited to proof of concepts. Indeed, nearly 40% of projects are in production, 33% in development and only 28% are at the concept stage.

For a responsive and fast-moving European digital laboratory
Responses to the survey confirm the relevance of these assets types and underline the need for support to security token projects, including regulatory compliance. The creation of a European digital laboratory is the first step in this direction. The AMF’s proposal, which aims to conditionally enable market players to be exempt from specific regulatory provisions at the EU level, is broadly supported. Respondents made several recommendations to ensure the digital laboratory is open to all stakeholders and guarantees legal protections. One component stands out as necessary for over 90% of those surveyed: the issuance of an on-chain euro-pegged stablecoin, an asset facilitating the settlement of transactions on the blockchain.


Download the report here