The recent news regarding the change in French crypto law spread chaos, endangering the status of crypto companies in France. As per the recent amendment in crypto law, crypto companies are bound to seek authorization from regulators if not registered with the country’s financial regulator by Jan. 1, 2024. The amendment is part of plans adopted by lawmakers at the National Assembly.
Brief Insight into French crypto regulation History
France took a significant step in early May 2022 regarding crypto regulation by granting crypto giant, Binance, Digital Asset Service Provider (DASP) registration. The registration enabled Binance to operate its crypto exchange in France. France became the first major European country to provide regulatory approval to a crypto exchange. The initiative was to secure France’s crypto companies’ status and attract more crypto companies.
The first ever contact between cryptocurrencies and French law was to fight money laundering, financial fraud, and terrorism financing. On 24 September 2020, The EU Commission published a proposal package that involves legislative proposals on crypto assets and proposals for a regulation on markets in crypto assets (MiCA).
France’s central bank governor stated that the country should work on introducing compulsory registration for crypto companies. Plus, digital asset registration must not be delayed waiting for a promised European Union regulation. The governor’s words indicate a lack of satisfaction with the pace of the European Union’s reaction to regulate crypto markets. EU was planning to pass a law that would introduce mandatory registration of crypto asset firms, within the time frame of 18 months.
The reason behind the new Lawmaker Plans
French crypto industry is considered among those successful countries that have the potential to become a global crypto hub. The start of 2023 following the global trend of tightening the crypto regulation reflects the aftermath of recent market failures. France’s government policy reassessed its eased regime of licensing for digital asset providers in order to regulate the crypto market more efficiently.
The Senate’s representative proposed tightening the crypto law following last year’s mega collapse of crypto exchange FTX. The current French law allows crypto companies to go through the lighter process of registering, rather than authorization.
The authorization process requires a fuller series of special checks on business conduct and financial resources. Even though many well-known companies, including Societe Generale and Binance, are registered, none have so far been officially authorized by the regulators.
Amendment proposed by Labaronne
As a matter of fact, crypto plans are relatively more relaxed than the Senate, which proposed last month to offer a cut-off date of October 2023. The purpose behind the new lawmaker plans is to stop crypto organizations from abusing new European Union rules known as (MiCA) Markets in Crypto Assets.
The date of January 1, 2024, was proposed by Daniel Labaronne representing on behalf of the Assembly’s Finance Committee on the new legislation. The reason was to let new entrants have more time to ask for their authorization, which is a complicated process. Plus, more time was required by the Financial Markets Authority to process applications.
The amendment proposed by Labaronne was necessary as there would be a risk of having companies just registering for the sake of benefit from the grandfather clause, included in the MiCA regulation. Without Labaronne’s proposal, the operators wouldn’t have to gain a full license until around March 2026. Therefore, the Committee accepted his proposal, which would be approved by the Assembly next week, and negotiated with the Senate.
French Crypto industry might have to through a whole process of authorization to operate the crypto exchange within the legal boundaries set by the law. To what extent it will affect the growth of France’s crypto industry is a big question.