French regulator: Too early to classify digital currency assets precisely

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The financial regulator of France has responded to a European Union (EU) consultation on digital currency laws by saying it prefers a limited scope for the EU in shaping the policy response.

The Autorité des Marchés Financiers (AMF) set out its views in response to a consultation process led by the European Commission, suggesting that it was too early for regulators to appropriately define and classify digital currency assets for the purposes of regulation.

The regulator defines digital currency assets as “a digital asset that may depend on cryptography and exists on a distributed ledger.” However, the AMF said in its view, distinctions need to be made between digital currency assets that are electronic money and those that are some other form of asset.

We believe it is important to keep the electronic money regime, which is relevant and should not be undermined by a new regulation. However, it would be useful to work on the articulation between the different regimes.

The regulator also flagged stablecoins as an area for concern, suggesting authorities could introduce a ban on their use in order to curb the uptake of these instruments and protect the integrity of mainstream financial systems.

“This proposal would allow a regulatory framework to apply to any stablecoin regardless of its size. However, this requires the ability to draw a line between stablecoins which would be concerned by mandatory requirements and other payment tokens only partially covered by mandatory requirements.”

In its response, the regulator says the scope of EU regulation should be limited to digital currency assets only, giving individual regulators across member states the authority to establish their own approach to regulating digital currencies in the payments context.

The regulator also highlighted the risks around ICOs, including its concerns about the high numbers of scams and dodgy investment propositions to have emerged in recent months.

The consultation comes at a time when other regulators across the EU are working on their own regulatory frameworks. Counterparts in Germany are already developing their own laws for regulating digital assets, as with regulators elsewhere, in a bid to control the growth and use of digital currencies and other digital assets within their economies.

It remains to be seen whether the response from French regulators will influence decisions made at the European Commission-level around how the trading bloc will regulate digital currencies going forward.