France to Reassess Crypto Licensing Post-FTX Collapse

In light of the global trend toward tighter cryptocurrency regulations following recent market calamities, France is contemplating a reevaluation of its lenient licensing regime for digital asset providers. This potential shift poses a challenge to the nation’s image as a pro-crypto haven in Europe.

Proposed Changes to Licensing Regime

According to a recent report by the Financial Times, Hervé Maurey, a senator on France’s finance commission, has tabled an amendment aimed at removing a clause that currently allows crypto companies to operate without a full license until 2026. This arrangement would remain in effect even after the upcoming Markets in Crypto Assets (MiCA) regulation is enacted in 2024.

If Maurey’s amendment is passed, digital asset firms will be required to secure a license from the Autorité des Marchés Financiers (AMF) starting in October 2023. According to Maurey, the catastrophic fallout from FTX has prompted a reevaluation of oversight priorities, stating:

“This led a number of players within the French system to consider that things needed to be supervised more tightly.”

Current Landscape and Historical Context

At present, approximately 50 registered crypto companies in France have been operating without stringent licensing from the AMF. Thierry Philipponnat, a former board member of the AMF, has voiced concerns about the insufficient level of investor protection under the existing framework, deeming it “very light if not non-existent.”

Potential Implications of the Amendment

The proposed amendment was adopted by the Senate on December 13 and is set for parliamentary discussions in January 2023. The local industry association, Developing the French Digital Asset Industry (Adan), has criticized the amendment, suggesting it signifies a retreat from supporting a burgeoning sector.

President Emmanuel Macron’s government had been noted for its vocal backing of the digital assets field, as demonstrated by Macron’s promises to encourage the growth of tech unicorns within the country, establish a clear NFT policy, and develop a vision for a “European metaverse”. However, the president has also indicated skepticism towards a self-regulated financial sector.

Conclusion

As France contemplates tightening its regulatory stance on digital assets, the balance between supporting innovation and ensuring consumer protection will undoubtedly be at the forefront of discussions among lawmakers and industry advocates alike. The developments in early 2023 will be crucial in defining the future landscape of cryptocurrency regulation in France.