France to end soft licensing regime for crypto firms
The digital asset space continues to face pressure on multiple fronts following the bankruptcy of exchange FTX. Once touted as Europe’s “crypto paradise”, France is now moving ahead with its plans to tighten regulation, supervision and oversight of cryptocurrency companies.
A member of the Senate’s finance commission in France said the country needs to reconsider its easy licensing regime for digital asset providers. Hervé Maurey, who chairs the committee on regional planning and sustainable development, proposed an amendment to current legislation to eliminate a clause that enables crypto platforms to operate without a full regulatory licence until 2026.
Maurey has called on lawmakers to start working on fresh crypto regulations to protect the financial system after the collapse of the FTX exchange. He suggests to tighten grips even before tougher EU rules will come into effect in 2024.
The much-debated Markets in Crypto Assets bill, or MiCA, includes a 12-18 month adaptation period to prepare for the new laws set in place, which means that the laws could take effect in full at the start of 2024 at the earliest. The EU-wide regulatory framework will grant passporting rights for crypto firm working across the continent.
President of the European Central Bank, Christine Lagarde, also called for MiCA II to regulate activities related to crypto asset-staking and lending. The term refers to an additional legislation building on the work lawmakers did for the original bill.
Reflecting on FTX’s sudden implosion, ECB chief said the incident was more about the “stability and reliability” of the exchange. Still, it shows a need for proper crypto regulation before digital assets cause wider economic damage. Lagarde also was worried that crypto will eventually grow to the point where it becomes a financial stability risk.
France’s current Pacte Law encompasses a very broad range of measures covering many aspects of all crypto-active players. The laws require cryptocurrency exchanges as well as custodian providers to undergo a mandatory AMF registration and obtain a certification to be granted by the French watchdog. France’s primary regulator confirmed that it is already involved with other crypto-related operators such as exchange platforms, custodians, and asset managers.
Nepenthes, the current rules enable digital asset providers to operate in the country without going on to gain a fully-fledged licence, meaning they can provide their services with minimal checks.
Previously, France introduced its own guidelines governing the ICOs and similar token sales earlier in 2018 and then proposed legislative amendments to put cryptocurrency-related entities under the legislative purview of its financial watchdog.
Furthermore, the framework comes with hefty fines for those who fail to comply, but will not reimburse investors for their losses as it happens with compensation funds that cover traditional investments.