France on the verge of passing stringent crypto firm licensing laws

The French National Assembly has voted in favor of legislating stricter licensing rules for new cryptocurrency firms in order to harmonize local laws with proposed European Union (EU) standards.

The vote was passed with 109 votes (60.5%) in favor to 71 (39.5%) against. With the French Senate having already passed the bill, it will now be passed to president Emmanuel Macron who has 15 days to either approve it or send it back to the legislature.

✅ Projet de loi DDADUE dans les domaines de l’économie, de la santé, du travail, des transports et de l’agriculture | Adoption par l’Assemblée nationale, compte tenu du texte de la commission mixte paritaire.En savoir plus ➡️ https://t.co/CDlQxPrs1b#DirectAN pic.twitter.com/PZ2uuC4MrS

— Assemblée nationale (@AssembleeNat) February 28, 2023

If passed, the new law would oblige France-based cryptocurrency service providers to comply with stricter anti-money laundering rules, show that customer funds are segregated, adhere to new guidelines on reporting to regulators and provide more detailed risk and conflict of interest disclosures as a means to strengthen consumer protection.

The contents of the bill would not however apply to the 60 crypto firms registered with the Financial Markets Authority (AMF), the nation’s financial regulator. These firms will continue to comply with the AMF’s rules until the likely passing of the EU’s own crypto regulations with the Markets in Crypto-Assets (MiCA) bill.

The stricter rules would therefore only apply to crypto firms that register from July 2023 onwards.

Among the 60-AMF registered companies include Binance, which recently began piloting in-store payments in France with the cloud-based payment platform Ingenico via Binance Pay.

Crypto payments just got easier in France We've recently partnered with @ingenico, a global payment solutions provider, to enable users to pay in crypto through #Binance Pay. Another milestone for global crypto adoption pic.twitter.com/S8f8Pab7nW

— Binance (@binance) February 22, 2023

The legislative push for stricter licensing rules was initiated by Hervé Maurey, a member of the French Senate’s finance commission, who proposed an amendment to eliminate a clause enabling crypto companies to operate without a full license until 2026 in a parliament meeting in December last year.

Bank of France governor, Francois Villeroy de Galhau, also pushed the agenda in a Jan. 5 speech to members of the finance sector in Paris.

Related: Bitcoin business in France: Regulation, education and cash buy frustration

Like many regulators around the world, Villeroy de Galhau cited the need to respond to the recent turmoil in the cryptocurrency market as the motive behind the bill, which he wants to come into effect “as soon as possible.”

While MiCA will likely serve as the blueprint for cryptocurrency market regulation in the EU, he added that France simply couldn’t wait around for the more comprehensive laws enacting the licensing regime on digital asset service providers (DASPs).

The EU is set to finally vote on MiCA regulation in April after two postponements. A successful outcome would likely see the highly anticipated crypto laws come into force sometime during 2024.