France has emerged as a promising haven for crypto companies grappling with regulatory uncertainties in the United States. With a regulatory framework that offers relative predictability, French officials are rolling out the welcome mat for crypto firms seeking stability. Currently, France is home to approximately seventy four registered crypto companies, a number poised to rise to 100 as more enterprises look to proactively navigate the European Union’s forthcoming Markets in Crypto Assets (MiCA) rules, recently approved by ministers.
Recently, while highlighting France’s trailblazing role in the crypto industry to reporters, Benoît de Juvigny, the Secretary General of the Autorité des marchés financiers (AMF), expressed pride in the country’s legislative achievement with the crypto service asset provider regime (PSAN) established in 2019. He emphasized that American players are more than welcome to benefit from the French regulatory regime in the short term and, starting from 2025, from the broader European arrangements. De Juvigny also noted the positive relations and ongoing discussions with their US counterparts.
However, France’s recent attainment of legal certainty in the crypto sphere followed a period of potential disruption. In January, legal experts cautioned that proposed legislative amendments, eventually diluted, had the potential to stifle innovation. While some gray areas remain, such as determining the scope of crypto social media influencers’ promotional activities, the AMF plans to publish a paper in the coming weeks with ideas on regulating financial services lacking a central entity.
Nonetheless, the stark contrast between France’s relatively stable legal framework and the uncertain regulatory environment across the Atlantic has prompted notable players, including Bittrex and Coinbase, to exit the US market or consider such a move. The absence of clear crypto laws from Washington, coupled with active regulatory enforcement, has fueled this exodus and underscored France’s attractiveness as an alternative destination.
Due to regulatory uncertainty and a lack of clear policies in the United States, crypto companies are seriously considering shifting their operations to more favorable jurisdictions. Industry leaders and experts have expressed concerns that the failure of the U.S. Congress to enact crypto-related legislation is pushing the industry to countries with more advanced regulatory frameworks, such as Europe, Australia, the UK, and Switzerland. While some companies have already made moves overseas, the actual exodus is still largely in the exploratory stage, with founders and entrepreneurs considering options in countries like the Cayman Islands, Portugal, and Singapore.
Presently, seventy four companies, including industry giants like Binance and Bitstamp, have secured registration in France, demonstrating compliance with basic governance and anti-money laundering measures. These companies have the option to pursue a license if they possess the necessary capital, although no licenses have been granted thus far. Transitional measures introduced earlier this year require companies applying from July onwards to undergo a reinforced registration process, which entails demonstrating resilient IT systems and a conflict of interest policy.
The implementation of MiCA, set to take effect in 2025, will further enhance the regulatory landscape, granting companies the right to serve the pan-European market and expanding the scope to include services such as crypto investment, advice, and portfolio management.
While the web of four coexisting regulatory regimes in France may seem complex, officials are determined to refute industry complaints about impractical requirements and prolonged procedures. Contrary to concerns, officials assert that crypto firms can indeed obtain commercial insurance to meet AMF standards, with contracts available for scrutiny.
Stéphane Pontoizeau, a director at the AMF, responsible for supervising market infrastructure and intermediaries, reassured reporters that diligent adherence to the AMF’s guidelines could enable companies to attain a new status within a few months. He added that delays in the process often arise when companies fail to sufficiently prepare.
Anticipating a surge in registrations, it is estimated that around a hundred companies will be positioned at the starting line in France before MiCA comes into force. However, some companies, either headquartered in other EU member states or exclusively serving the French market, may not seek a full AMF license under the EU law.
For certain players, France’s rigorous approach may be a key selling point. Circle, a stablecoin issuer, has applied for registration from the AMF and expressed its intent to pursue a license. Teana Baker-Taylor, Circle’s Vice President for Policy and Regulatory Strategy, praised the AMF’s reputation for being a forward-thinking market regulator that effectively manages risk, underscoring France’s reputation as a jurisdiction that does not take a light-touch approach. Circle’s chief strategy officer has said, “France is increasingly seen as a leader in crypto.”
France’s proactive and stable regulatory framework positions it as an appealing destination for crypto companies seeking legal certainty amidst the uncertain regulatory landscape in the United States. As the crypto industry continues to evolve, France’s commitment to fostering an environment conducive to innovation and compliance is poised to strengthen its position as a leading player in the global crypto ecosystem.