The proposal, which is expected to receive support from both the National Assembly and the Senate, deviates from a call to make a license mandatory as of October.
- French regulations for crypto companies will likely tighten starting by January 2024.
- Measurements aim to instate an effective regulatory system for lawmakers.
Announcement
According to recommendations issued on Friday by a committee of parliamentarians from both houses of Parliament, registration requirements for French cryptocurrency enterprises would tighten as of January 2024, though not to the extent that the Senate, the nation’s upper house, had initially been requested.
According to the Joint Committee’s language, newly applying businesses must adhere to additional internal controls, cybersecurity, and conflict of interest requirements. This is less burdensome than an earlier Senate position that mandated license applications from businesses. The National Assembly and Senate need to approve the special legislative committee’s draft by February 16 and February 28, respectively.
French Crypto Regulation
Following French cryptocurrency legislation, businesses can register with the Financial Markets Authority to demonstrate compliance with fundamental money laundering and governance standards. An operator still needs to be granted a license, a more complex process involving investigations into one’s financial standing and ethical behavior.
The enhanced registration process was a “far more reasonable approach” than the Senate’s, according to Faustine Fleuret, head of the crypto lobby group ADAN. She cautioned, however, that small businesses would find it challenging to comply with the new obligation to have reliable and secure IT systems. Authorities may need help to enforce.
In the wake of the FTX crash and to ensure French legislation doesn’t provide a loophole from complying with new European Union standards known as the Markets in Crypto Assets regulation, Senator Hervé Maurey advocated tightening the requirements last year. According to industry advocates, Maurey’s plans, which would have required any unregistered crypto provider to apply for a license by October, may not be feasible.
Future Roadmap
Advocates for the cryptocurrency industry are placing their faith in France’s National Assembly, the lower chamber of the French Parliament, to reverse a legal reform that they fear will jeopardize France’s ambition to become a cutting-edge hub for the industry. A senator said forcing cryptocurrency companies to apply for licenses to operate in France presents many issues. Regulators, meanwhile, who want to prevent collapse a la the FTX, are supporting legislative initiatives to compel licensing more and more.
Any cryptocurrency company that isn’t registered with the Financial Markets Authority (AMF) by October 1, 2023, will need to apply for a license, a more demanding process involving checks on financial resources and business conduct that no company has so far successfully pursued.
In a document presented with his amendment, Senator Hervé Maurey said that “the recent collapse of FTX has brought attention to the inherent risk of all investment in crypto assets, particularly when the company works outside of any regulation.” As new European Union (EU) regulations known as the Markets in Crypto Assets regulation (MiCA) take effect, the adjustment will “prevent any misuse of the regulatory environment,” he continued.
MiCA, which is expected to go into effect in late 2024, requires that cryptocurrency providers, such as exchanges and wallet companies, be authorized and comply with financial stability and consumer protection standards. Those already recognized under a national system, like France’s, will have an additional 18 months to comply.
Regulators, such as the AMF and the French central bank, have now backed Maurey’s suggestions; nevertheless, some claim they will be impossible to implement, detrimental to the economy, and in conflict with MiCA.
Conclusion
The authorities must understand the importance of developing the sector in France. They must control this industry to maintain employment opportunities, talent pools, and digital sovereignty. Many senators thought it was encouraging that the administration made an effort to obstruct the move and that more excellent knowledge of and support for the industry would result in a more well-informed discussion in the Assembly.
