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New Cryptocurrency Regulation in France

The French government has recently adopted a new financial sector bill, establishing a newly developed legal framework for all ICO’s and cryptocurrency service providers. This bill consists of both nonmandatory and mandatory licensing also specifying exactly the different types of funds that could possibly invest in cryptocurrency assets. The Pacte bill was published this Monday, on April 15th.

The finalized text of the Action Plan for Business Growth and Transformation law was adopted at the final reading by the French Parliament. The Pacte Bill establishes a legal framework for virtual asset service providers and ICO’s.

The bill was originally launched two years ago (2017) in October but actually presented to the council last year in June. The bill consists of a variety of articles, non-regulatory and regulatory systems, tax measures- which will all be included into this year’s finance bill.

The Pacte bill introduces the option for cryptocurrency service providers to be licensed and placed under the governance of the AMF (Autorité Des Marchés Financiers).

Even though getting a license is optional the AMF gave a comment on the topic as follows: “Whether or not they choose to obtain the optional license, service providers who wish to provide digital asset custody services to third parties or to purchase/sell digital assets in exchange for legal tender are subject to mandatory registration with the AMF.”

The bill gives the option for Initial Coin Offering issuers to apply for an approval from the AMF, but only if they will meet specific requirements. One of the requirements of the AMF is that the issuer must be legally tied to/ incorporated or registered in France and also must be able to provide up do date and adequate information about the company.

The company also needs to have a system that monitors all assets and sets the AML and CFT measures in place. Simply- it needs to be backed up by high-level of security.

The AMF notified: “Until now, fundraising through the issuance of tokens not classified as financial instruments was not subject to any specific rules, raising of funds without AMF approval will continue to be legal in France. However, issuers who have not received the approval of the AMF will not be able to solicit the general public. The AMF will publish the list of ICOs that have received its approval.”

The bill also gives two types of funds that have the permission to invest in digital assets. These are “professional specialised investment funds provided that they comply with the liquidity and valuation rules applicable to them/professional private equity investment funds subject to a limit of 20% of their assets,” as specified by the AMF. French government is also pushing the European Union to act on the same line.

Reference: https://www.amf-france.org/en_US/Reglementation/Dossiers-thematiques/Fintech/Vers-un-nouveau-regime-pour-les-crypto-actifs-en-France