The European Union has recently demonstrated additional interest in the potential uses of blockchain technology for financial services outside of virtual currencies. On April 22, 2015, the European Securities and Markets Authority (ESMA) issued a “Call for Evidence” (the “Call”) from stakeholders to provide information related to uses of blockchain technology related to securities and investment products, including investments in virtual currencies.

ESMA’s Call states that the agency is interested in examining three different issues:

• “Investment products which have virtual currency as an underlying” source of value, such as an investment in a virtual currency-related business or a derivative instrument that has virtual currency as the reference asset;
• “Investment in virtual currency based assets/securities, and the transfer of those assets/securities,” such as shares or fund interests that are issued and traded using distributed ledger technology; and
• “Other uses of the distributed ledger in relation to investment,” such as using distributed ledger technology to record ownership of “traditional” securities.

ESMA poses several questions to help it gain more understanding of the virtual currency landscape regarding investment products, seeking information about the kinds of investment products being offered, the profile of the investors in these products, how the blockchain ledger works with respect to the investment transactions, and the benefits and risks of virtual currency-based financial assets and securities.

Entities who are actively engaged in offering or investing in virtual currency investment products, or who advise others on the use of the blockchain technology for securities transactions (whether or not the transactions require payment in virtual currency) are encouraged to submit their comments and share their knowledge with ESMA. Public comments may be submitted online at www.esma.europa.eu (at the tab called “Your input – Consultations” and with reference to the title: “Investment using virtual currency or distributed ledger technology”) and are due by July 21, 2015.

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