Jamal Al-Farouq French financial regulator AMF is revising its cryptocurrency regulations to align with the European Union’s MiCA law. These changes, scheduled for implementation next year, are aimed at reinforcing registration prerequisites for companies offering specific digital asset services like custody and trading.
The Autorité des Marchés Financiers (AMF), France’s financial watchdog, recently announced adjustments to its regulations concerning digital asset service providers (DASPs), with a focus on instituting more rigorous registration processes for certain entities.
The modifications were introduced through the DDADUE law, a French acronym, which empowered the Paris government to incorporate directives from the European Union, a move made earlier this year. This law clarified aspects of the EU’s Markets in Crypto Assets (MiCA) legislation and established an “enhanced” registration system, obligatory from January 1, 2024, for market participants aiming to offer specific digital asset services such as custody, fiat-to-crypto transactions, and crypto-to-crypto trading.
The AMF’s current amendments aim to integrate these “enhanced” registration stipulations into its General Regulation and policies, primarily applying to DASPs subject to these stringent requirements. Furthermore, the goal is to harmonize the conditions for French DASPs with those needed for EU authorization for crypto asset service providers (CASPs) under MiCA.
The enhanced DASP registration mandates various obligations for cryptocurrency companies, encompassing the establishment of robust security and internal control systems, conflict of interest management, the provision of precise and transparent information, and upholding transparent pricing practices.
There are also specific clauses related to the safeguarding of customer funds, demanding a clear separation between client and company assets and barring the utilization of client funds without explicit prior consent. These updated French standards emerge amidst a global crackdown on the cryptocurrency industry, where regulators have accused significant crypto exchanges like the now-defunct FTX and the world’s largest crypto trading platform, Binance, of misappropriating or mixing customer funds.
France’s comparatively clear regulatory framework has enticed several crypto companies, including Binance, along with institutional players aiming to extend digital asset services to their clientele. In June, AMF Secretary General Benoît de Juvigny expressed that American entities keen on taking advantage of the French regulations and, subsequently, European arrangements starting in 2025, are indeed welcome.
Feel free to share your thoughts on France’s more stringent regulations for digital asset service providers in the comments section below.
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Frequently Asked Questions (FAQs) about Crypto Regulations
What changes are France’s financial market regulator implementing for crypto companies?
France’s financial market regulator, the Autorité des Marchés Financiers (AMF), is making adjustments to its rules for crypto companies in alignment with the European Union’s new regulatory framework. These changes, effective next year, involve enhancing registration requirements for businesses providing specific digital asset services like custody and trading.
What is the purpose of the enhanced registration requirements for crypto companies?
The enhanced registration requirements introduced by the AMF are in accordance with the DDADUE law, which allows France to transpose EU directives. These requirements, mandated from January 1, 2024, for market players offering certain digital asset services, such as custody and trading, aim to ensure higher standards and accountability in the crypto industry.
The DDADUE law aligns with the European Union’s MiCA (Markets in Crypto Assets) legislation. It introduces an “enhanced” registration regime that sets stricter rules for digital asset service providers (DASPs). These rules are designed to harmonize the requirements for DASPs in France with those seeking EU authorization for crypto asset service providers (CASPs) under MiCA.
What are some key requirements for crypto companies under the enhanced DASP registration?
The enhanced DASP registration mandates various requirements for crypto companies, including the establishment of robust security and internal control systems, effective conflict of interest management, provision of accurate information, transparent pricing policies, and the segregation of client and company assets for custody purposes.
How do these changes impact the cryptocurrency industry in France?
These changes signify a shift towards more stringent regulations in the French cryptocurrency industry. They aim to enhance transparency, accountability, and investor protection within the sector. While these changes might pose challenges for some companies, they also demonstrate France’s commitment to fostering a responsible and well-regulated crypto ecosystem.
