The French National Assembly has voted to legislate stricter licensing rules for new cryptocurrency firms to harmonise local laws with proposed European Union (EU) standards. The bill was passed with 109 French Senate members voting in favour of the law and will become law only after it receives a green light from French President Emmanuel Macron.
On February 28 2023, the French National Assembly vote was passed with 109 votes (60.5%) in favour to 71 (39.5%) against the proposal. The French Senate has approved the bill to see different requirements on cyber security, internal controls and conflicts of interest. The new crypto-related bill has been introduced in the wake of recent market turmoil and as part of a broader effort from the nation’s lawmakers to adjust the French laws with EU standards. After the approval from the French Senate, the bill was sent to the President of France, Emmanuel Macron, who has 15 days to sign the rules into law or send it back to the legislature.
Suppose the French President Emmanuel Macron gives the new bill the go-ahead. In that case, it will oblige France-based cryptocurrency service providers to comply with stricter anti-money laundering rules. And show that customer funds are segregated, adhere to new guidelines on reporting to regulators and provide more detailed risk and conflict of interest disclosures as a means to strengthen consumer protection.
Steps in The Crypto World in France
Companies must register with France’s Financial Markets Authority (AMF), which involves checks on governance and money laundering norms, and is mandatory for all those offering trading or custody services in the country. This includes companies such as Binance and Bitstamp, which have successfully registered with AMF, but no company has gained a licence.
Insiders at Bitcode Method Official (click here)mentioned that Binance recently started piloting in-store payments in France with a credit card service company Ingenico. This allows in-store crypto payments via Binance pay. Bitstamp CEO Jean-Baptiste Graftieaux said, “The Company is very proud of its new status as a virtual asset provider in France because French represents one of the most important markets for Bitstamp in Europe.” Graftieaux added, “The crypto-asset market has been experiencing a major turning point for a few months. As a pioneering player, we want to be a driving force in adopting crypto-currencies from a wider public.”
However, the bill’s contents would only apply to some of the 60 crypto firms registered with the Financial Markets Authority (AMF), the nation’s financial regulator. These firms will continue to comply with the AMF’s rules until the likely passing of the EU’s crypto regulations with the Markets in Crypto-Assets (MiCA) bill. Stricter rules will only apply to crypto firms that register from July onwards.
The legislative push for strict licensing rules was initially proposed by Senator Hervé Maurey in December 2022, who cited the collapse of the FTX crypto exchange and the need to avoid loopholes before the EU’s Markets in Crypto Assets Regulation (MiCA) takes effect. Maurey proposed an amendment to eliminate a clause enabling crypto companies to operate without a full licence until 2026.
Previous Crypto Asset Bill Suggestions
On January 5 2023, the Bank of France Governor Francois Villeroy de Galhau gave a speech on the Paris agenda to finance sector members. The Governor of the Bank of France said, “Recent volatility in the sector means France shouldn’t wait for European rules to come into effect before making it obligatory for Digital Asset Service Providers, or DASP, to obtain licensing from authorities.” When asked about the necessity to regulate crypto-related companies in France, he said, “All the disorder in 2022 feeds a simple belief: France should move to an obligatory licensing of DASP as soon as possible rather than just registration.” According to Galhau, MiCA will likely serve as the EU’s blueprint for cryptocurrency market regulation.
However, the industry hoped the plan was not damaging and unworkable, although regulators supported the move. The new licensing bill will apply to all firms seeking to operate in France from July 2023. As of January 2024, both chambers of the French parliament have settled on a compromise proposal that adds additional registration requirements. The transition period offered by MiCA to firms already holding AFM licences is until 2026.
After two postponements, the EU is finally set to vote on MiCA regulation in April 2023. The recent delay was due to a technical issue where an official 400-page document needed to be translated into the 24 official languages of the EU was not. With EU policymakers planning to set a standard regulation to establish harmonised rules for crypto assets, a successful outcome would likely see the highly anticipated crypto laws come into force sometime next year. The new bill does not force companies to seek a licence.
By: Hannah Parker