Francois Villeroy de Galhau, governor of the Bank of France, called for tougher regulations for crypto firms on Thursday, January 5. This is a huge surprise for crypto institutions looking to establish a foothold in Europe.
The central bank governor is now willing to wait for the European Union’s landmark Markets in Crypto Assets (MiCA) regulation, citing current market volatility and downturns. MiCA is a licencing regime that will apply to the entire EU bloc but is not expected to be implemented until next year, in 2024.
Obtaining a licence for Digital Asset Service Providers (DASPs) in France is currently optional. Villeroy wants to make it mandatory for any cryptocurrency company that wants to operate in France.
So far, no crypto service providers in France have obtained a DASPs license. Nearly 60 cryptocurrency firms, including Binance Holdings, have opted for the less stringent “registration” from market regulator AMF. Villeroy said yesterday in a speech to the financial sector in Paris:
“ All of the chaos in 2022 feeds a single belief: it is preferable for France to move to mandatory DASP licencing as soon as possible, rather than just registration.”
To obtain a licence, a DSP must meet the requirements for financial resources, organisation, and business conduct outlined by the Autorité des Marchés Financiers (AMF).
The French Central Bank will tighten crypto regulations
Amid the crash and multiple bankruptcies in the crypto space over the past year, regulators around the world are on high alert. As a result, France too has come under pressure to tighten its crypto regulatory framework beyond minimal oversight. Hervé Maurey, a member of the Senate’s influential Finance Committee, is urging the French government to review the Senate’s cryptocurrency-friendly stance. According to Maurey, “the collapse of FTX was a detonation [that] contributed to a moment of reckoning and conscience. “
“This caused a number of players within the French system to feel that things needed to be monitored more closely.”
A DASP licence, according to Maurey, would provide better consumer protection. Furthermore, it would require crypto firms to disclose more information about their financial health and control systems. “We have always been clear that registered players are very lightly regulated, and we have urged investors to be extremely cautious,” the AMF said.
However, Adan, a crypto lobbying group in France, believes that the proposed amendments will result in the country abandoning its ambitions to become a crypto hub. Adan also accused France of “abandoning a future industry” because of FTX’s demise.