The bill was passed with a vote of 109 in favor and 71 against and will now rely on the approval of president Emmanuel Macron to be signed into law.
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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. The French Senate has already passed the bill, which now goes 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 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 in Decemberproposed an amendment to eliminate a clause enabling crypto companies to operate without a full license until 2026.
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..
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.
France is on the cusp of passing stringent regulations on cryptocurrency companies that would require crypto businesses to obtain a license to operate in the country.
The Bank of France has been working closely with the Prudential Supervision and Resolution Authority (ACPR) and the French asset manager regulator, the Autorité des Marchés Financiers (AMF), to devise regulatory measures that are sensitive to the financial risks associated with digital currencies.
Under the new rules, which will be applicable to all digital asset service providers (DASP), whether based in France or abroad, certain requirements have been put in place. It includes having a registered office in France and following “know-your-customer” (KYC) procedures to prevent money laundering and terrorist financing.
In addition, businesses seeking a license must establish procedures to protect customer financial interests and strengthen the security of client information. Crypto firms will also need to provide proof of sufficient capitalization and adopt sound risk management standards.
The legislation is expected to be passed by the French Parliament in the near future, although the exact date is yet to be confirmed.
By introducing these regulations, the French government is taking a major step towards bringing cryptocurrency and the wider blockchain-based technology industry under an appropriate framework. It will provide reassurance to both individual and institutional investors that the services they use are subject to proper regulation.
At the same time, it will help create a fairer, more transparent market and a level playing field for all participants, thus allowing France to remain a competitive financial center in the digital asset arena.