France’s top banking regulator pushes for stricter digital assets rules ahead of MiCA: report

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While the industry is still reeling from the so-called crypto catastrophes of 2022, French regulators are calling for stricter regulations to prevent a repeat of events, says a Bloomberg report.

At the head of the clamor for stiffer rules is Bank of France Governor Francois Villeroy de Galhau, who has taken a swipe at the existing legal framework for being ideal for bad actors. Villeroy de Galhau’s main grouse with the industry lies with the rule that allows service providers to operate without a mandatory license from regulators.

“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,” Villeroy de Galhau said in a recent speech.

Currently, digital asset firms can operate without a full license because the law allows them to carry out business with a temporary license pending the acquisition of the main one. None of the over 60 digital asset firms operating in France has obtained a full license from the Financial Markets Authority (or the AMF).

Binance, Bitpanda, Luna, and eToro are some of the firms operating with a temporary license in the country, but given the series of large-scale implosions over the few months, the calls for a regulatory review have reached a fervent pitch. The central bank president is not the only one making the calls for firmer rules. Back in December, French MP Herve Maurey moved a motion to eliminate the multiple registration options for industry operators.

Maurey cited FTX’s implosion as a time of sober reflection, “reckoning, and awareness” for the industry and urged fellow MPs to act fast to save the ecosystem.

While France has been described as one of the leading jurisdictions in terms of virtual currency adoption, it is important to note that the country still has several policies designed to stifle the operations of bad actors. The rules include the control of digital asset advertising and imposing a 30% tax on profits from trading virtual currencies.

Tighter rules are inevitable for France in the coming years

Whether French regulators tighten the noose around the industry’s neck or not, digital currency enthusiasts are bracing themselves for sweeping changes.

The European Union’s Market in Crypto Assets (MiCA) regulation, set to be operational in 2024, will impose strict registration requirements for all service providers across the region. A vote on MiCA legislation has been scheduled for February after a previous delay back in November 2022.

In 2022, the Financial Action Task Force’s (FATF) “travel rule” for digital assets was approved, requiring French digital asset companies to inform regulators of transaction details exceeding $1,000.

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