By Michael Scott
The prolonged crypto market turbulence inspired France’s financial regulators to demand strict crypto regulations. The financial regulators urge unregistered crypto firms to be licensed to reduce investment risk.
France Crypto Firm Licensing Regulations
The market dynamism in the crypto realm influenced the French government to enact crypto regulations in 2021. The regulation has undergone a series of developments aiming to improve the country’s crypto activities.
Recent adjustments align with the EU’s efforts to harmonize the regulatory environment to boost crypto adoption in the block. Such efforts are evident in developing the Market in the Crypto Asset (MICA) proposal. The MICA bill, scheduled for enactment next year, aims at introducing a digital assets service provider (DASP) license to companies in the crypto industry.
In the meantime, the French government has allowed crypto firms to operate without a license. Crypto licensing is expected to be effective from 2026 when the EU crypto policies will fit into the new licensing system.
Financial Regulators Demand Amendment of MICA Bill
The calamitous nature of FTX collapse, leading to a contagious downfall, layoffs, and liquidity crisis of other crypto firms, has triggered concerns among regulators, investors, and entrepreneurs. The majority express concerns over the sector’s vulnerability to the emergence of powerful centralized actors.
A report in a local newspaper Le Figaro by Denis Beau, the current Deputy Governor of the France Central Bank, expressed disappointment at the collapse of Terra Luna and, recently, FTX. He portrayed concerns about how crypto firms in France explored the crypto space. Beau urged the government to expedite the licensing of the crypto firm to reduce the risk of losses that might affect investors’ confidence in crypto assets.
Regulators at the French Financial Market Authority (AMF) had a similar view. The Chair of AMF, Marie-Anne Barbat Layani, urges the authorities to issue a license to the 60 registered crypto firms.
She retaliated that the leading crypto exchange platform Binance and other crypto firms have been registered with AMF. Layani encouraged the unregistered to comply, citing that the process requires few legal formalities. She confirmed that the registration process only involved monitoring the firm’s compliance with the French Anti-Money laundering policies.
Additionally, last year the French senate demanded the amendment of crypto regulation as the country awaits the MICA Bill to be enacted.
Nonetheless, the French government agencies firmly condemned the proposal for the amendment. The stance prompted the National Assembly to schedule a meeting with the Finance Commission to discuss the matter on January 17.
Benefits of Licensing Crypto Firms
The licensing procedures will require crypto firms to provide a detailed report about the firm performance, operation, and company information.
Its achievement will lower the risk of investment loss witnessed in 2022. In particular, the strict disclosure will ease the assessment of the firm’s performance and operation on the government systems.