France Moves Ahead With Tighter Crypto Rules
France is tightening its cryptocurrency rules as part of a European Union package that is designed to protect new investors. The stricter rules will only apply to new entrants, while existing players will have more time to comply. The French National Assembly has approved the new rules, which now only need the approval of President Emmanuel Macron to become law. If the law is passed, it would oblige cryptocurrency providers to comply with stricter anti-money laundering rules and to provide detailed risk and conflict of interest disclosures, among other requirements.
Stricter rules only apply to new entrants
The new rules will only apply to new entrants to the market, with existing players being given time to comply. The 60 companies that have opted for simpler registration under France’s existing two-tier system will not be affected and will have until Europe-wide regulations come into force. Under the existing system, companies can apply for simple registration with local financial regulator L’Autorité des marchés financiers (AMF) to operate, but can also opt for full licensing in a process that requires more disclosure. None of the firms registered in France have opted for a higher level of licensing.
A compromise solution
An initial proposal by French Senator Hervé Maurey had sought to impose higher standards on all crypto firms in France, including those already registered. However, this was met with opposition from the industry and other lawmakers. A compromise was eventually reached that withdraws the option of simple registration for new entrants to the market, but allows existing ones to continue operating until the EU’s landmark crypto regulations are brought into force.
MiCA could pose a challenge to France’s big bet on the industry
France has positioned itself as Europe’s cryptocurrency hub and has attracted companies such as Binance and Crypto.com to set up shop in the country. However, the introduction of MiCA, which will unify rules on cryptocurrency across the European bloc, could pose a challenge to the country’s big bet on the industry. The Markets in Crypto Assets (MiCA) could be passed as soon as April this year, but the rules would likely not come into effect until 2026.
Bank of France governor pushes for the new law
The push for stricter licensing rules was initiated by French Senator Hervé Maurey, but Bank of France Governor Francois Villeroy de Galhau also pushed the agenda in a Jan. 5 speech to members of the finance sector in Paris. Like many regulators around the world, Villeroy de Galhau cited the need to respond to the recent turmoil in the cryptocurrency market as the motive behind the bill, which he wants to come into effect “as soon as possible.” While MiCA will likely serve as the blueprint for cryptocurrency market regulation in the EU, he added that France couldn’t wait around for the more comprehensive laws enacting the licensing regime on digital asset service providers.
Tour De France
France is tightening its cryptocurrency regulations as part of a wider European Union package designed to protect new investors. The new rules, if passed, will only apply to new entrants to the market, while existing players will have more time to comply. France has been positioning itself as Europe’s cryptocurrency hub, but the introduction of MiCA could pose a challenge to this position. The Markets in Crypto Assets (MiCA) bill could be passed as soon as April 2023, but the rules would likely not come into effect until 2026. Bank of France Governor Francois Villeroy de Galhau has pushed for the new law, citing the need to respond to the recent turmoil in the cryptocurrency market as the motive behind the bill.