Winter is frosty for the cryptocurrency industry. The FTX financial scandal and price collapse highlighted the need for regulation of decentralized finance and its participants. On Tuesday, December 3, during a welcoming speech, the governor of the Bank of France, François Villeroy de Gallo, said that he was in favor of introducing compulsory licenses for cryptocurrency companies “as soon as possible”. The granting of this authorization will be subject to compliance by the respective companies.
The World of Crypto: The Digital Wild West?
Currently, companies providing crypto asset services in France can carry out their activities without obtaining a permit. The PACTE law promulgated in 2019 introduces the PSAN (Digital Asset Service Provider) status. Companies whose activities meet the following criteria must register with the Autorité des Marchés Financiers:
- Storage of digital assets
- Buying or selling digital assets as legal tender
- Exchange of digital assets for other digital assets
- The work of the platform for trading digital assets
Additional permission may also be granted by the AMF. The main benefit of this certification is the ability to broadcast advertisements. It is also a guarantee of confidence for investors. Cons: None of the 60 companies registered as PSANs have this status, which is particularly difficult to obtain.
Thus, the governor of the Bank of France wants to make it mandatory to obtain this permission, under pain of deprivation of the opportunity to engage in commercial activities.
MiCa, an attempt at “Made in Europe” regulation
The Governor of the Banque de France is also addressing European legislators, urging them to speed up the legislative procedure for MiCa (Crypto Asset Market), a draft regulation aimed at creating a harmonized legal framework for all markets of the Old Continent. This European initiative, due to come into force in 2024, notably establishes the accreditation of CASPs (Crypto Asset Service Providers), a transnational status similar to PSAN. François Villeroy de Gallo wants to go even faster by changing French law before the MiCa.
Still uncertain future
Balanced regulation of the cryptocurrency sector is still a long way off, despite strong demand from crypto players. On Dec. 13, ADAN, an association of about 200 digital asset professionals, posted a series of tweets denouncing the lack of “serious intentions to act against the legal and fiscal uncertainty weighing on taxpayers and crypto asset companies. The crypto winter is likely to be long.