Following growing fears in recent weeks of a potentially devastating vote for the French cryptocurrency industry, the National Assembly finally voted today in favor of a balanced evolution of the PSAN status, offering more guidance to the industry by avoiding the pitfalls of procedural suffocation.
Approval with the MFA remains optional
On Tuesday evening, the National Assembly held a crucial vote. Delegates were expected to vote on a provision to mandate certification of digital asset service providers (DSPs), which was accepted by the Senate in December.
In recent weeks, however, the Association for the Development of Digital Assets (Adan) has condemned such a text as potentially capable of eliminating the cryptocurrency industry in France.
It was against this backdrop that Renaissance MP Daniel Labaronne proposed a last-minute amendment on Friday. Instead of imposing this famous mandatory homologation, he intends to tighten up the conditions for signing up new players.
As a reminder, the PACTE law of 2019 introduced a two-level regulatory system for Digital Asset Service Providers (PSAN): mandatory registration to operate on the French market, which imposes obligations and a very difficult to obtain but optional authorization.
Registration is mandatory in four areas, especially for players offering cryptocurrency custody or buying/selling services, with over 60 players registered in France to date, including Coinhouse, Binance and most recently Crypto.com. On the other hand, no current company or player on the market has obtained approval, which is more difficult to obtain.
The decision welcomed by ADAN
While the European MiCA regulation is expected to be implemented in 2024, the senators considered it appropriate to make authorization mandatory for any new company wishing to carry out PSAN activities in France.
Faced with such an inappropriate reaction, the Digital Development Association (Adan) and other bodies intervened to make public decision-makers understand that making PSAN certification mandatory in France would only lead to devastating consequences for the sector.
As a result, the originally planned mandatory approval was abandoned. On the other hand, the conditions for registering new PSAN candidates have been tightened.
“This is a pragmatic decision that aims at a happy middle ground between the flourishing of innovation in France and the safe environment for users in which it must necessarily take place” welcomed Faustine Fleuret, President and CEO of Adam.
For example, crypto firms need to be more transparent in certain areas, including when it comes to their security systems, disclosing potential conflicts of interest or employing “clear and non-misleading communications” with their customers. Main objective: to avoid new FTX scandals.
The sword of Damocles for the French ecosystem
This approach, widely supported by the Association, provides a more adequate answer to the various objectives of protecting depositors and restoring confidence in the cryptocurrency market without hindering innovation.
On the other hand, the French blockchain industry will have to proceed with caution in the coming months.
The government made a last-minute minor amendment to MP Daniel Labaronne’s amendment, giving him 12 months to legislate on the matter by decree. Therefore, accreditation will not be mandatory immediately, but may become so in the near future.
All that remains is to wait for the outcome of the parliamentary shuttle with the Senate for the approval of the text. With this achievement, the risk of hampering innovation in the context of France’s recent renewal of its ambition to become a “global crypto hub” is averted, at least temporarily.