The governor of the Bank of France said that they should not wait for the EU-wide MiCA standards, scheduled for 2024, to kick-in and must have their own indigenous regulatory stance in place.
On Thursday, January 5, the governor of the Bank of France – Francois Villeroy de Galhau – urged for tougher regulations for crypto firms. This comes as a major surprise for crypto institutions willing to establish a stronghold in Europe.
Citing the current volatility and downturns in the market, the central bank governor is now willing to wait for the European Union’s landmark Markets in Crypto Assets (MiCA) regulation. MiCA is a licensing regime that will be applicable to the entire EU bloc but scheduled to come sometime next year in 2024.
Currently, obtaining a license for Digital Asset Service Providers (DASPs) in France is optional. Villeroy wants to make it mandatory for any crypto firms willing to operate in France.
So far, no crypto service providers hold the DASPs license in France. Nearly 60 crypto firms including Binance Holdings have opted for the lighter touch “registration” from markets authority AMF. During his speech in Paris to the financial sector yesterday, Villeroy said:
“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”.
For a DSP to obtain a license, it should comply with the requirements of financial resources, organization, and business conduct noted Autorité des Marchés Financiers (AMF).
Central Bank of France to Tighten Crypto Regulations
Amid the crash and several bankruptcies in the crypto space last year, regulatory agencies worldwide are up on their toes. As a result, France too has come under pressure to tighten its crypto regulatory framework beyond the minimal oversight.
Hervé Maurey, a member of the Senate’s influential finance commission is putting pressure on the French government to revise the country’s crypto-friendly stance. Speaking to the Financial Times, Maurey said:
“The FTX collapse was a detonation [that] contributed to a moment of reckoning and awareness,” Maurey told the Financial Times. “This led a number of players within the French system to consider that things needed to be supervised more tightly.”
Maurey believes that a DASP license would provide greater consumer protection. Besides, it would also require crypto firms to disclose more information relating to their financial health and systems of control. “We have always been clear that registered players are very lightly regulated and we have called on investors to be highly vigilant,” said the AMF.
However, the crypto lobbying group in France- Adan – believes that with the proposed amendments, the country is giving up on its ambitions to become a crypto hub. Adan also accused France of “abandoning an industry of the future” because of FTX’s collapse.