After a lawmaker proposed harmonizing the country’s legislation with incoming EU regulation, France may compel crypto companies to obtain a full license to operate in the country.
As of now, the regulations permit cryptocurrency businesses to function there until 2026 without a formal license. According to the current proposal, companies would have to apply for a full license from the financial authority beginning in October. In doing so, it would be brought into compliance with the EU’s Markets in Crypto Assets (MiCA) regulation, which the European Parliament will likely vote on in 2023.
The reason for this is the recent bankruptcy of FTX, which has emphasized the risks inherent in any investment in crypto assets, especially when the company works outside of any regulation.
Bank of France Regulator Urges Tougher Regulatory Requirements
Francois Villeroy de Galhau, Governor of the Bank of France, has suggested stronger regulatory standards for crypto businesses, which could be a blow for an industry seeking a greater footing in Europe. Villeroy said that given the recent volatility in the market, France should impose licensing requirements on Digital Asset Service Providers (DASPs) without waiting for European regulations to take effect.
Villeroy said Thursday in a speech to the financial sector in Paris that, “All the disorder in 2022 feeds a simple belief: it is desirable for France to move to an obligatory licensing of DASP as soon as possible, rather than just registration.”
Full Digital Asset Service Provider (DASP) licensing is currently optional in France, and no French companies have secured a full license. Roughly 60 organizations have secured a less extensive “registration” from the country’s Financial Markets Authority (AMF).
One of those companies is Binance, which was granted authorization to operate in France in May.
Binance in Europe
Binance, a cryptocurrency exchange, operates throughout Europe from its headquarters in Paris, France. In May of last year, it received regulatory authority to function in France as a Digital Asset Service Provider.
Since then, “CZ,” the CEO of Binance, has stepped up his operations at the country’s crypto exchanges and met with authorities to pledge compliance with rules and anti-money laundering laws. He even referred to France as Europe’s centre for cryptocurrency.
However, with increasingly stringent rules in place, Binance and other similar companies will be obliged to comply, and this may have an impact on its operations.
France not the first to introduce regulations
However, apart from France, many other nations have enacted laws governing cryptocurrencies that are considerably stricter. While several other nations, including Russia, China, and Turkey, have outright prohibited it, Bitcoin trading is not permitted in Egypt without a Central bank license.
Introducing laws can have benefits such as increasing legitimacy and customer protection, but it can also have drawbacks such as stifling innovation and limiting freedom since it was designed as a decentralized form of currency.