France is set to tighten regulations on crypto firms as of January 2024, under new plans that were voted in favor by the National Assembly on Tuesday. The move comes as the country prepares for new laws from the European Union and follows recent market turmoil. The legislation is expected to introduce additional requirements on internal controls, cybersecurity, and conflicts of interest.
While France has been working to position itself as a hub for cryptocurrencies, the new rules will require companies to comply with financial norms and undergo mandatory checks on governance and money laundering. However, no firm has yet obtained a license, which is a more burdensome process than registration, due to the additional regulatory requirements that it entails.
The strengthening of France’s regulatory regime was initially proposed by Senator Hervé Maurey in December, citing the collapse of the FTX crypto exchange and the need to avoid loopholes before the EU’s Markets in Crypto Assets Regulation (MiCA) takes effect. Regulators themselves supported the move, though the industry had initially feared that the proposal was unworkable and damaging.
In the end, both chambers of the French parliament have settled on a compromise proposal that adds extra registration requirements as of January 2024 but does not force companies to seek a license. The Senate previously voted in favor of that proposal on February 16.
The French government has been working to establish itself as a crypto-friendly nation for some time, with the country’s Financial Markets Authority (AMF) having already approved registrations for firms such as Binance and Bitstamp. However, there have been previous regulatory actions taken in the country as well, including in 2019 when the AMF warned the public about unauthorized crypto firms operating in the country.
The move to tighten regulations on crypto firms is not unique to France, as governments around the world have been grappling with how to regulate the industry. In the US, the Securities and Exchange Commission (SEC) has been cracking down on crypto-related scams and fraud, while China has banned all crypto-related activities outright.
The new regulations in France are expected to provide a clearer framework for companies operating in the crypto sector, helping to bolster investor confidence and protect against potential market risks. With the sector growing rapidly and becoming more mainstream, it is essential that governments take steps to ensure that it is properly regulated and safeguarded.
Overall, the move by France to tighten regulations on crypto firms is a positive development for the industry, as it provides a clear framework for companies to operate within while also protecting investors and the wider market. As the crypto sector continues to evolve and expand, it is likely that we will see more countries taking similar steps to regulate it.