Stricter Cryptocurrency Licensing Rules in France
The French National Assembly has passed new legislation that aims to enforce stricter licensing rules for new cryptocurrency firms to ensure local laws align with proposed European Union (EU) standards. The bill was passed with 109 French Senate members voting in favor of the law and will become law only after it receives approval from French President Emmanuel Macron.
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 French laws with EU standards. The bill will require 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 to strengthen consumer protection.
This blog post will discuss the details of the French cryptocurrency licensing law and what it means for the crypto industry in the country.
Steps in the Crypto World in France
Companies offering trading or custody services in France must register with France’s Financial Markets Authority (AMF), which involves checks on governance and money laundering norms and is mandatory. Companies such as Binance and Bitstamp have successfully registered with AMF, but no company has gained a license.
Insiders at Bitcode Method Official mentioned that Binance recently started piloting in-store payments in France with a credit card service company Ingenico, allowing 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 France represents one of the most important markets for Bitstamp in Europe.”
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.
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.”
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 licenses is until 2026.
EU Approvals for MiCA Regulation
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. With EU policymakers planning to establish harmonized 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 license.
Conclusion
The new cryptocurrency licensing law in France brings changes to the regulatory framework for crypto service providers operating in the country. The law requires companies to comply with stricter anti-money laundering regulations and improve customer protection. It remains to be seen how the industry will respond to these changes, but it is clear that France is taking steps to align its crypto regulations with those of the broader EU community. As the EU is set to vote on MiCA regulation, the crypto industry must remain vigilant to changes in the regulatory landscape in Europe.
