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II. OTHER TITLES USING THE BLOCKCHAIN
Cryptomoney would perform poorly as a form of currency[1]. This statement is true because of the significant fluctuation in the price of most cryptomonnages. Some people invoke the financialisation of the market as the culprit, so that the qualification as a financial instrument is sometimes considered[2]. The analyses show that the concepts are incompatible with traditional cryptomoney schemes, which are not issued by anyone. However, certain types of virtual assets, such as "tokens", can, since 2016, be recorded on a particular electronic medium, so that their recognition depends on their medium. Since they are only a medium, it is necessary to study the rights incorporated on a case-by-case basis, since they may fall under existing categories. In particular, certain crypto-actives should be qualified as financial instruments. Financial instruments are defined in French law[3] as including financial contracts (A.) and financial securities (B.).
A. CONTRACTS INVOLVING CRYPTO-ASSETS
Financial contracts - Financial contracts are not defined but are listed[4]. Thus, financial contracts are financial futures (financial warrants, certificates of guarantee value), firm contracts (futures contracts, swaps), options contracts, credit derivatives[5] without aiming in any way at a crypto-active. However, a contract is financial when it concerns assets which, although not mentioned, have the characteristics of other financial instruments (in particular when traded in an organised system) [6]. If cryptomoney can be seen as an asset, it would seem that a contract relating to crypto-assets, with a view to obtaining interest, constitutes a financial contract meeting this condition.
Crypto-actives are not financial contracts - In its report on ICOs, the qualification of ICOs as financial contracts was put forward[7], but immediately rejected by the institution, which does not see tokens in the list of financial contracts. However, it does not rule out the possibility, in view of the rights incorporated, of having to take a decision in this regard when certain tokens present characteristics falling within "one of the categories of financial contracts listed in Article D211-1 A of the Monetary and Financial Code"[8]. Thus, the category of financial contracts is appropriate for cryptomoney derivatives, particularly in the trading of crypto-currencies, where operators grant real loans in cryptomoney to benefit from leverage, and tend to be apprehended by some regulated markets[9].
Derivatives in crypto-assets are financial contracts - This was the solution adopted in the United States when the SEC had to rule on the nature of cryptomoney in a dispute over a contract concerning cryptomoney. The SEC qualified it as a financial contract, since it related to an asset[10]. Thus, by classifying it as a financial contract, the United States seems to recognise the monetary nature (at least a real value) of the cryptosystem[11]. A Swiss decision also seems to have been pronounced in this regard[12]. In France, such an offer by unregulated platforms can be analysed, after noting that the qualification of the derivative is independent of that of its underlying product, as a financial contract[13], thus making the regulations applicable to the offer of financial instruments[14] applicable.
This type of use seems to imply a financial regulation that the category of financial instruments could provide, but would be incompatible with crypto-actives as a whole because, "while some instruments, without being qualified as financial instruments, are subject to their regime by law, this is not the case for cryptomoney"[15] per se.
B. TOKENS INCORPORATING VOTING OR FINANCIAL RIGHTS
The category of financial instruments is not compatible with the way in which cryptomoney is issued, but certain cryptoscripts may have certain characteristics of financial securities, the method of holding of which should not exclude the application of the regime.
Financial securities - Financial securities are equity securities (ordinary shares, preferred shares), debt securities (bonds, negotiable debt securities, complex bonds) and units in collective investment schemes (UCITS, FIAs or special-purpose financial securities) [16]. This category is strictly regulated since only certain institutions are authorised to issue them: the government, a legal entity, a mutual fund, a real estate investment fund, a professional real estate investment fund or a securitisation mutual fund[17]. Thus, a financial security presupposes an identified issuer with a special status to be able to issue such a security.
Inappropriateness with monetary tokens - It is clear that, strictly speaking, cryptomonnages are not issued by anyone, since it is impossible to consider that minors, for example, are issuers, and have no link or reference in the real or financial economy outside themselves[18]. It is therefore impossible to classify cryptosystems as financial instruments, just as it is impossible to conceive of a financial security without an issuer or a financial contract without a purpose. This is reflected in the article on financial instruments, which excludes cash vouchers from its scope[19]. Certain forms of crypto-actives, such as "tokens", are issued by a specific legal entity, usually a company, at the very least with regard to the technical prerequisites for undertaking such an operation. Thus, the category of financial instrument is not to be discarded in order to understand certain uses of cryptosystems such as this type of financing, the author of which must necessarily be identified.
Appropriate qualification for financial tokens - When a crypto-active is issued not in return for the operation of the network but in return for funding a cryptographic project, the term ICO is used. It is then issued not to the people operating the computer network, but to investors financing a project based on cryptomoney technology by providing cryptomoney. The latter receives in exchange "tokens", cryptomoney issued by the instigator of the project having also decided on the characteristics offered by the possession of a "token": the use to benefit from the developed service, or voting or financial rights. The issue of a cryptographic unit can indeed be for monetary or commercial purposes[20]. If in the first case, only contracts relating to these cryptomonnages seem to qualify as financial instruments, the second category when it incorporates voting or financial rights seems to fall within the category of financial securities.
Tokens incorporating voting or financial rights - These are tokens that are intended to grant financial or voting rights to their holder[21]. Only a small minority of ICOs issue tokens with this type of prerogative[22]. Thus, as the tokens may be of a different nature, the rights incorporated in the "token" issued as consideration for the contribution should be analysed on a case-by-case basis. If they incorporate voting or financial rights, they could be qualified as capital securities[23], whereas if they represented a monetary claim, they would then be debt securities[24]. However, as these two hypotheses are marginal in practice, it does not seem to suit the majority of the tokens issued.
It is difficult to establish with certainty the nature of cryptomoney is difficult in view of the profusion of existing forms (more than 1,300 according to the Banque de France report[25]). The emergence of new dematerialised securities in "blockchains" is not likely to simplify the task, since it seems that any security based on the "blockchain" is a crypto-active, regardless of the origin of the security (a cryptographic currency and a dematerialised action in a "blockchain" are therefore covered by the notion of crypto-active, even though the functions are totally different). It is because cryptography is a tool applicable to various legal forms that establishing a common nature is difficult, where the application of a regime that meets the purpose of each crypto-active is most relevant.
[1] Banque de France, « L’émergence du bitcoin et autres crypto-actifs : enjeux, risques et perspective », Focus n° 16, 5 mars 2018, p. 1.
[2] N. Mathey, « La nature juridique des monnaies alternatives à l'épreuve du paiement », Revue de Droit bancaire et financier n° 6, nov. 2016, dossier 41.
[3] Art. L211-1 du C. mon. fin.
[4] Annex 1, Section C), EU Dir. 2014/65/EU, 15 May 2014 concerning markets in financial instruments and amending Dir. 2002/92/EC and Dir. 2011/61/EU, OJEU L173/349, 12 June 2014, reproduced in Art. L211-1, III and D211-1, A, C. mon. fin.
[5] Art. D211-1. A, 1 à 7, C. mon. fin.
[6] Art. D211-1. A, I.,8, C. mon. fin.
[7] N. Mathey, « La nature juridique des monnaies alternatives à l'épreuve du paiement », Revue de Droit bancaire et financier n° 6, nov. 2016, dossier 41.
[8] Ibidem.
[9] V. during 2017, the listing of bitcoin futures proposed by the Chicago Board Options Exchange or the Chicago Mercantile Exchange.
[10] « Security » au sens de : U.S. Code, Title 15, Chapter 2A, Subchapter I, § 77b.
[11] Implicit position adopted by the SEC in the United States: USDC, "Securities and exchange commission v. Trendon T. Shavers and Bitcoin savings and Trust ", Case n°4 :13-CV-416, Sept. 18, 2014.
[12] AMF, « Synthèse des réponses à la consultation publique portant sur les Initial Coin Offering (ICO) et point d’étape sur le programme « UNICORN » », 22 février 2018, p. 9.
[13] P. Pailler, « Les dérivés sur crypto-monnaie sont des contrats financiers », Revue de Droit bancaire et financier n° 2, mars 2018, alerte 23, par. 5.
[14] AMF, « Analyse sur la qualification juridique des produits dérivés sur crypto-monnaies », 22 févr. 2018., p.7.
[15] P. Pailler, « Les dérivés sur crypto-monnaie sont des contrats financiers », Revue de Droit bancaire et financier n° 2, mars 2018, alerte 23, par. 2.
[16] Art. L211-1, II, C. mon. fin.
[17] Art. L211-2, C. mon. fin.
[18] N. Mathey, « La nature juridique des monnaies alternatives à l'épreuve du paiement », Revue de Droit bancaire et financier n° 6, nov. 2016, dossier 41.
[19] Art. L211-1, IV, C. mon. fin.
[20] H. Causse, « Jetons et tokens créés par ICO : réalités fondamentales et pratiques de l’émission », Hebdo édition affaires n°548, 12 avr. 2018, p. 13, par. 39.
[21] They are called "investment tokens" in the terminology used in Switzerland: H. CAUSSE, "Jetons et tokens créés par ICO : réalités fondamentales et pratiques de l'émission", Lexis Nexis, Hebdo édition affaires du 12 avr. 2018, par. 23.
[22] AMF, « Synthèse des réponses à la consultation publique portant sur les Initial Coin Offering (ICO) et point d’étape sur le programme « UNICORN » », 22 févr. 2018, p. 3.
[23] Idem, p. 7.
[24] Id., p. 8.
[25] Banque de France, « L’émergence du bitcoin et autres crypto-actifs : enjeux, risques et perspectives », Focus n° 16, 5 mars 2018, p. 1.