The French National Assembly has voted to pass new licensing rules for crypto firms operating within the country as part of a larger bill aiming to harmonize French law with European Union standards. The vote tally was 109 in favor and 71 against, following an industry push that resulted in the provisions of taking on a more lenient form than initially proposed. This regulatory push was initiated after the collapse of FTX and is expected to be a step forward for anticipated EU-wide rules.
Starting July 2023, companies offering crypto services must register with the Financial Markets Authority (AMF) under the more robust registration process, according to the new law. Those already registered according to anti-money laundering provisions will not need to re-register until the MiCA transition period is completed, likely in 2026. The bill will now be sent to French President Emmanuel Macron for approval.
New registration proposal sets higher standards for crypto service providers
The recently proposed registration system would impose higher regulatory standards on crypto service providers, such as enhanced governance and rules for the segregation of funds, transparent risk disclosures, and conflict of interest policies. While this is a step in the right direction, it is not an adequate substitute for the European Union’s wider MiCA framework, which will take effect over a year after its final vote.
Anne-Sophie Cissey, head of legal and compliance at Paris-based crypto service company Flowdesk, expressed her concern that the requirements set by the French regulations could be too high for smaller companies to meet, leading to a competitive disadvantage compared to those in other jurisdictions. Faustine Fleuret, head of French crypto lobbying group ADAN, noted that these measures are necessary to ensure consumer protection but warned that they could drive away fresh start-ups from Europe. Cissey echoed this sentiment, noting that complying with the regulations “will surely be more difficult for smaller projects.”
Compromise reached between french policymakers and the crypto industry
Following the collapse of crypto exchange giant FTX in November, social-liberal Senator Hervé Maurey proposed an amendment in December to require French crypto firms to obtain a license from the AMF by October 1, 2023.
The crypto industry pushed against the amendment, however, and liberal-centrist Senator Daniel Labaronne put forward a more attainable registration with a 2024 deadline. This formed a compromise between policymakers and industry, providing milder provisions than the original bill proposed. Fleuret welcomed this as “a step in the right direction,” asserting it would protect investors while preserving innovation and business creation in France.