A true game changer for the entire cryptocurrency industry! In mid-December, senators adopted amendment xx aimed at “requiring any actor wishing to practice the profession of digital asset service provider (PSAN) to be pre-approved by the MFA starting from 1 at the latest October 2023”. It is now up to MEPs to decide on the matter on 24 January. If the text were adopted as it stands, this would constitute a double penalty for French operators in the sector, who would be hindered in their development and forced into exile, but also for French individual investors, who would be redirected towards unregulated forms of FTX .
In detail, the amendment presented by Senator Hervé Maurey, member of the Finance Committee of the High Assembly, aims to impose the approval of the MFA on any actor offering crypto-assets on French territory, from October 1, 2023 at the latest .
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62 actors registered but none approved to date
To date, a player wishing to offer cryptocurrencies in France currently has two options: to have a mandatory PSAN registration (for the digital asset service provider) or an authorization (optional), issued by the AMF under the Pacte law of the 2019 However, if 62 companies currently benefit from the MFA PSAN registration covering the good repute and competence of managers, as well as a section on anti-money laundering and terrorist financing… no approvals (including capital requirements and an information systems audit) has so far been released.
As it stands, the amendment approved by the Senate would therefore simply amount to banning all French actors from exercising on our territory. In justification of this proposal, the senator underlines the fact that “the recent bankruptcy of FTX has highlighted the risks inherent in any investment in cryptoassets, particularly when the company operates outside of any regulation”. He also points to the European MiCA regulation which provides for mandatory authorization for all crypto-asset service providers (PSCA), with requirements close to the optional French authorization.
The AMF and the Banque de France on the initiative of the amendment
If this European regulation comes into force in October 2024, a transitional period of 18 months is foreseen for players who already have a card or an authorisation. The latter will be able to continue their activity without approval as PSCA until March 2026″, regrets the senator, however, according to which this transitional period “could be at the origin of a “call to the air” for the actors, who would hasten apply for registration in order to benefit from a further period of 18 months before having to apply for homologation”. “Or, les prestataires qui demandent leur enregistrement PSAN sont, pour la plupart d’entre eux, des acteurs qui, en l’état, ne seraient pas en mesure d’obtenir un agrément PSAN et, a fortiori, PSCA”, poursuit- they.
Presented in mid-December and voted on in the wake of the Senate after a fast-tracked procedure, the senator’s amendment took the crypto ecosystem by surprise. Especially since the elected official had never taken a position on this issue. “This amendment comes from the parliamentary hearings of the Financial Markets Authority (MFA), which is on the initiative of this measure,” reveals Stanislas Barthélémi, a consultant at Blockchain Partners, a consultancy firm linked to KPMG. “And if the government expressed an unfavorable opinion on this amendment before the vote in the Senate, the Banque de France is also pushing it, the deputy governor of the institute Denis Beau having explained in particular that the implementation of this device seemed inevitable for him ”, he develops.
Several approval files already sent…but impossible to get
However, this amendment is not without its problems. “Nobody is against regulation, we are just against this unsustainable program,” plagues Faustine Fleuret, president of the Association for the Defense of Digital Assets (Adan). She considers it preferable to stick to the European MiCA regulation timetable, designed to give players time to prepare for compliance, but also to give authorities time to prepare to approve these players ”, she points out.
Because the senator is wrong when he writes that “today no PSAN-registered actor has asked for approval” from the AMF. “It is wrong. Several PSANs have tried to agree and have submitted dossiers on this, but the conditions to be met are very difficult or even impossible to meet, especially on the aspects of professional indemnity insurance and on that of safety IT (information systems audit)”, points out Faustine Fleuret. “In the last two years nothing has been done to solve the problem related to the impossibility for the players in the sector to take out professional insurance”, she regrets. – she again. a lot of zeal when actors fail to obtain approval in the state, it’s crazy”, adds Stanislas Barthélémi, according to whom this amendment therefore constitutes a “recall”.
The two experts also find the MFA’s stance on this matter surprising, knowing that the regulator “doesn’t have the staff to process applications for approval,” says Stanislas Barthélémi. And Faustine Fleuret recalled that an amendment proposal to the 2023 finance law aimed at strengthening the staff of the AMF and the ACPR recently received an unfavorable vote from deputies.
If the amendment tabled by Senator Maurey is voted as-is by French MPs on Wednesday January 24, it will have a devastating effect on the entire French cryptocurrency industry. “We are not measuring all the consequences yet, but the current players will no longer be able to develop with the erection of such barriers. It is very damaging,” Judge Stanislas Barthélémi. Another trap: if players with PSAN cards can no longer offer services to French investors, the latter will turn to foreign players, less or not regulated at all. French companies, they, “would be tempted to move to where the regulations are less strict, such as Malta, Belgium or Luxembourg”, foresees Faustine Fleuret.
Double punishment for French players and investors
This amendment would effectively create a gap between France and the other countries and cause a loss of competitiveness for French players,” suggests Faustine Fleuret. This argument should, according to her, encourage the government to reiterate its unfavorable opinion before the vote of the National Assembly. “If the goal is to pose the least risk to individuals, we need regulated French players to be able to grow and become European champions under the supervision and supervision of the authorities,”
Before the vote in the National Assembly, the amendment will be discussed in the Finance Committee (chaired by MP Daniel Labaronne) on Wednesday 18 January. It could therefore be subject to changes, especially on the nerves of war which is the proposed date (October 2023) to get a little closer to the mandatory implementation date envisaged by the MiCA (March 2026).
If the will to strike a blow after the sensational bankruptcy of FTX is flagrant, Faustine Fleuret has other ideas to improve the protection of users of these platforms, which is the declared objective of the regulators: “The priority should be to guarantee from a on the one hand that the actors comply with the regulations in force, and on the other hand that foreign actors who do not comply with them are sanctioned, which currently does not happen”. “Other measures can be effective, proportionate, pragmatic and feasible (contrary to the proposed amendment), such as the strengthening of the obligations in terms of communication and information on the part of the Psan she” she judges again.
While waiting for these elements to enter the debate, it is in any case the amendment presented by Senator Maurey that will be voted on by the National Assembly in less than two weeks. And MEPs will hold in their hands, on this occasion, part of the future of French players in the sector.