French Lawmakers Soften Stance on Compulsory Crypto Licenses

Crypto industry advocates had been concerned about tougher rules in the wake of the FTX collapse and as new EU legislation is readied.

AccessTimeIconJan 24, 2023 at 6:58 p.m. UTC
Updated Jan 24, 2023 at 7:30 p.m. UTC
Consensus 2023 Logo
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.

Jack Schickler is a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.

Consensus 2023 Logo
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.

Crypto companies in France would have to follow extra conflict of interest and consumer protection rules as of 202, under proposals voted on by lawmakers at the National Assembly on Tuesday.

The Assembly voted 61 in favor of, and 33 against, the proposed measure. But the move will likely lead to sighs of relief in the crypto industry because it represents a softening of a stance by the Assembly’s Finance Committee and by the French Senate, which favored a more heavy-handed requirement for firms to hold a compulsory license by October.

Like other members of the European Union, France is preparing for the arrival of new bloc-wide legislation known as the Markets in Crypto Assets regulation (MiCA). In the wake of the FTX collapse, lawmakers want to ensure national procedures aren’t creating any new loopholes.

In December, Senator Hervé Maurey said crypto companies that aren’t registered with France’s Financial Markets Authority (AMF) by Oct. 1, 2023, should be obliged to seek a license – something that requires extra checks on governance and financial management, and which no crypto firm has yet succeeded in gaining.

Maurey was worried companies might otherwise seek to register in France (without seeking a license) as a way of avoiding MiCA rules for a further 18 months, given grandfathering rules set out in EU law, and were supported by the AMF. But the industry said the Senate’s plan was harmful and unworkable.

Under the plans agreed by the National Assembly on Tuesday, crypto companies applying to be registered after January 2024 would face extra rules to manage conflicts of interest, separate client assets and publish their fees. That represents a halfway measure between registration and full licensing that prepares the ground for MiCA’s arrival, its author Daniel Labaronne said.

“This amendment looks to select more reliable players for future registrations,” without abandoning the authorization system in place in France for a number of years, said Labaronne’s amendment.

“Making a French license entirely compulsory while other members of the EU are moving towards MiCA under its planned timetable would prove ineffective to achieve the goal of protecting consumers,” added Labaronne, who is from President Emmanuel Macron’s Renaissance party.

Crypto advocates have previously voiced concerns that the requirements to secure a license, including to be insured and meet cybersecurity norms, impose unreasonable burdens on the industry and on regulators.

The vote will find favor in an industry that complains licenses are time-consuming, if not impossible, to obtain in practice. In a statement sent ahead of the vote regarding the amendment, lobby group ADAN told CoinDesk that it and the industry “very much welcome the pragmatic and proportionate approach reflected in these proposals.”

The changes proposed allow France to respond to concerns relating to the FTX collapse while allowing a better-adapted regime for emerging players and boosting innovation, French digital minister Jean-Noël Barrot told lawmakers during the debate.

MiCA, set to come into effect around the beginning of 2025, would allow an extra 18-month grace period for companies already registered in France before they have to comply with strictures on governance and reserve management.

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Jack Schickler is a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.


Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.


CoinDesk - Unknown

Jack Schickler is a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.