Are French companies and authorities still on the same wavelength when it comes to crypto?

L’Adan advocates a transition at softness to MiCA via a clause at grandfather from 18 monthsa key factor for the collective success from French players on the Web3. For theAMFthe first concerns are theharmonization and the protection from investors.

Faustine Fleuret, president of theAdanthe Association for the Development of Digital Assets, knows how to be gentle with its government counterparts. Earlier this month, on the occasion of the Fintech 3.0the CEO welcomed the role played by the France in the field of crypto through the “construction of a launch pad”.

While the rest of the world is groping its way forward, France, supported by a determined government, combative parliamentarians, inventive administrations and, above all, a dynamic ecosystem, has managed to extricate itself from the fray in order to give innovation its full chance,” declared Faustine Fleuret, extolling the merits of the Pacte law on October 18.

Striking a balance between innovation and protection

This pillar has led to the registration of around a hundred PSANs – but only one approval, SG-Forge. This record justifies France’s status as a “regulatory vanguard”. It is true that the French system largely inspired the European regulation MiCA.

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But if the Pacte law deserves so much praise from Adan, it’s because of its primary characteristic: “a subtle blend of user protection and technology development”, considers Faustine Fleuret.

And if the association’s president is thus promoting the political approach put in place under the Macron governments, it’s not least to preach in favor of the same trajectory for current dossiers: monetizable NFTs, digital identity, the digital product passport or DeFi.

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“A good regulation”, i.e. one that “bears fruit”, must be “adapted to business models and balanced in its obligations”, maintains the CEO.

French PSANs need time, and more likely 18 months of clause

Does MiCA meet these criteria? In any case, it is described as “an extension of the French gamble”, and potentially a way for PSANs and local companies to benefit from “a head start”.

Why? Because they will have had time to learn, to spread out the costs of compliance, particularly for start-ups, justifies or conditions Faustine Fleuret. And to ensure a successful transition from a French framework to a European version, “which can be a very tall order”, she promotes a grandfather clause of 18 months rather than 12.

The European Securities and Markets Authority, ESMA, however, is encouraging member states to limit this transition period to 12 months for the application of MiCA. Faustine Fleuret is hoping that the French authorities will extend this period, deeming “learning time” key to France’s collective success. The risk otherwise?

After letting the information train go by, do we want to let the Internet of value go by? What’s at stake is France’s economic power, and in turn its political power,” she continues.

Doubts, but from abroad

The head of Adan doesn’t shy away from the doubts currently hanging over the crypto industry.

Foreign bankruptcies have had systemic consequences and hampered confidence in the sector,” she points out in particular.

“Would it be quite reasonable to draw a line under this major technological innovation?” she questions, warning against a victory of doubts. Without mentioning it, the sector in France also suffers from other factors, such as the degraded image of Binance, which has been a member of the Adan board since June.

It should be remembered that the exchange is under investigation for money laundering in France, in addition to proceedings in the USA, including against its CEO, CZ.

In any case, on October 16, at an event organized by theACPRthat they were not impervious to doubts.

The crypto world has changed radically for the AMF

Its chairman François Villeroy de Galhau, who is also governor of the Banque de France, is thus calling for progress to be made without further delay on MiCA 2, which will focus in particular on crypto conglomerates and DeFi. Since 2022, the tone has also changed on the side of theAMFas illustrated by the speech delivered by AMF Chairman Marie-Anne Barbat-Layani in October.

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“We can only note that the world of crypto-assets and its perception have, we must acknowledge, radically changed in the space of a year”, she declared. And this change calls for proportionate regulatory evolution.

International discussions are accelerating with a view to stricter regulation in all jurisdictions”, reports the AMF boss.

The crypto ecosystem is also expected to deliver on several fronts, including its ability to comply with regulations and further demonstrate its economic and social utility.

While Faustine Fleuret is convinced of this usefulness and of the need for the French economy to get on the Web3the regulator points to the doubts that fracture the industry.

And the AMF does not intend to content itself with declarations. It expects to see quantified measures on the contribution to the economy and job creation, the financing of the real economy, investor protection and the environment.

Beware of regulatory shopping on MiCA

For the AMF, the priority is the implementation of MiCA, with mandatory approval by the end of 2024, but also its harmonization across Europe. Harmonization has already been able to constitute a loophole in European arrangements, with some states, for example on the RGPD, being less demanding.

Is the duration of the grandmother clause really key for the French ecosystem, as Adan believes? This is not certain in the eyes of the AMF, for whom it is unlikely that all registered PSANs will have the means to comply with MiCA.

Marie-Anne Barbat-Layani also disagrees on the issue of consumer protection. As far as Adan is concerned, the Pacte law has achieved a balance.

Investor protection the poor relation

On the contrary, the Chairwoman of the AMF considers investor protection to be “the poor relation of regulation”. There are currently no provisions for investor protection”, she insists.

As the ecosystem develops, it is important that investors benefit from all the protections they have in other areas”, she considers.

And for the AMF, the European MiCA passport makes harmonization of regulations even more critical, to protect consumers as well as regulated companies in France.

We are working at ESMA to avoid opening the way to forum shopping, which would enable certain players to put national authorities in competition with each other in a dangerous race to the bottom in terms of regulation”, she explains.

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