France Considers Expediting EU Rule Compliance for Registered Crypto Firms

The French Financial Markets Authority (AMF) has proposed a “fast track” option for licensed crypto firms to get regulated under the upcoming Markets in Crypto-Assets (MiCA) laws, according to a statement published on April 21. 

The AMF is currently considering options to ensure that French providers of digital asset services (PSANs) are compliant with MiCA regulations as soon as possible. 

The regulatory package, which aims to establish a clear and consistent regulatory framework for crypto assets among the European Union (EU) member states, was approved by the European Parliament on April 20 and now needs approval from the European Council in July to be officially adopted as regulation.

The MiCA compliance will plug the gap relating to aspects such as fund provision regulations of crypto firms, conflict of interest policies, and the alignment of requested documents required under AMF and MiCA regulation. In France, crypto firms have two licensing options, a “simple” option offering relaxed requirements, and a more stringent “enhanced” option, which is favored by the government and is reported to be closely aligned with MiCA regulations already.

The stricter option has greater controls surrounding anti-money laundering rules, customer asset custody, reporting to regulators, and providing detailed risk and conflict of interest disclosures to strengthen consumer protection. All 60 AMF-registered crypto firms in France are regulated under the relaxed option and will remain that way until they are ported over to MiCA regulation.

The AMF has previously stated that any crypto firm that registers after January 2024 will have to do so under the more stringent option. Notably, the AMF also outlined that any company regulated under either category can only offer its services in France until they are ported over to MiCA. 

“These actors will be able, during this period, to continue to offer their services to the French public only,” the statement reads, adding that “service providers who are approved under the MiCA regulation will be able to benefit from the European passport and provide their services in all EU countries.”

The AMF’s proposed fast-track option is a positive development for licensed crypto firms in France as it will allow them to comply with MiCA regulations sooner, giving them a competitive advantage in the EU market. The regulation, tentatively slated to come into effect from the start of 2025, will establish a harmonized regulatory framework for crypto assets across the EU, providing greater clarity and legal certainty for market participants.

The proposed regulation has been welcomed by the crypto industry, which has been seeking greater regulatory clarity for years. The industry has faced significant regulatory hurdles, particularly in Europe, where different member states have adopted different regulatory approaches to crypto assets. 

The lack of harmonization has created legal uncertainty for market participants, hindering the growth and development of the industry.

The MiCA regulation is expected to address these issues by providing a clear and consistent regulatory framework for crypto assets across the EU. The regulation will cover a wide range of crypto assets, including cryptocurrencies, stablecoins, and utility tokens. 

It will require issuers of these assets to provide comprehensive disclosure and transparency to investors, including information on the asset’s characteristics, risks, and costs.

The regulation will also introduce custody, governance, and investor protection rules, aimed at reducing the risks associated with crypto assets. It will require crypto asset service providers to obtain authorization from their national regulator and comply with strict anti-money laundering and counter-terrorism financing requirements.

Overall, the MiCA regulation is a positive development for the crypto industry, providing greater regulatory clarity and legal certainty for market participants. The AMF’s proposed fast-track option for licensed crypto firms in France is a step in the right direction, allowing these firms to comply with MiCA regulations sooner and gain a competitive advantage in the EU market.