Their position is clearly important because French regulation of payment services revolves around the use of legal tender (i.e. legal tender issued by a sovereign country). All payment services defined in Article L. 314-1 MFC involve the use of funds. According to payment services directive 2 (PSD 2)26, funds refer to “banknotes and coins, lettering or electronic money within the meaning of Article 2(2)(2) of Directive 2009/110/EC”.27 Therefore, the receipt and sending of cryptocurrencies on behalf of third parties is generally not considered a regulated service within the meaning of PSD 2. The European Commission is also in the process of revising PSD 2, and public consultations to gather input from professional stakeholders will take place from 10 May 2022 to 5 May 2022. July 2022.28 Crypto companies in France that do not comply with KYC and AML regulations will be fined up to €5 million under the law. Such fines directly affect a company`s bottom line and lead to a clouded brand image. Compliance with updated cryptographic regulations is therefore necessary. 33 The Block, “France to create G7 stablecoin working group after libra announcement,” June 21, 2019: www.theblockcrypto.com/tiny/france-to-create-g7-taskforce-on-cryptocurrency-stablecoin/. From banning anonymous transactions to extensive registration rules, this article explains in detail how the latest French crypto regulations will affect businesses. It should be noted that this licence does not exclude other optional or mandatory authorisations, such as the optional visa for ICOs, which intermediaries offer under a system involving different assets or the investment firm`s licence to offer investment services for investment tokens or crypto derivatives (swaps, futures, etc.). The new regulation takes crypto-to-crypto services and trading platforms operating in France out of a legal gray area.
From now on, they will be subject to the same AML/KYC obligations and mandatory registration as other crypto companies. Cryptocurrency mining is allowed in France and does not fall within the scope of existing French financial regulations. The creation of the proposed new committee — which would gather evidence from the crypto industry and banking during a series of hearings — is not yet complete and would certainly not take place before the October break. Regulation No. 2020-1544 was adopted on 9 December 2020 and entered into force on 9 June 2021. Therefore, crypto companies operating in France must be registered with the AMF before this date. Companies that are not yet active in France must obtain this registration before they can offer their services. 6 European Commission, Proposal for a Regulation of the European Parliament and of the Council on information relating to transfers of funds and certain crypto assets, 20 July 2021. More specifically, French crypto companies will have to register with the AMF and now deactivate anonymous crypto transactions or accounts. Therefore, every customer must undergo reliable KYC verification with two forms of identity verification, regardless of the amount of the transaction.
The Financial Crimes Enforcement Network (FinCEN) is the leading regulator in the United States responsible for overseeing crypto exchanges. While it doesn`t consider digital currency to be legal tender, it calls it an important way to transfer money and proposes strict laws to curb crime. Crypto platforms are legal in the United States, and it is important that they all register under the Bank Secrecy Act (BSA) and ensure amL/CFT compliance while maintaining proper records of all financial transactions. 41 AMF, `The AMF and Tracfin sign a new cooperation protocol`, 31 March 2022. Access under www.amf-france.org/fr/actualites-publications/actualites/lamf-et-tracfin-signent-un-nouveau-protocole-de-cooperation. However, due to anti-money laundering concerns (in particular due to the Fifth Anti-Money Laundering Directive), obtaining registration with the AMF is mandatory for depositaries of digital assets, providers of the purchase or sale of digital assets against legal tender and since Regulation No. 2020-1544 of 9 December 2020 for companies that buy or sell digital assets in exchange for other assets. digital and mandatory for companies operating a digital asset trading platform. The conditions for obtaining this registration are not excessively cumbersome: registered service providers must provide the AMF with information on the reputation and professional qualifications of their managers and beneficial owners, as well as on the internal procedures for compliance with anti-money laundering legislation. Registration is granted by the AMF, although prior approval from the ACPR is also required. As in many countries, the first contact between crypto-currencies and French law was made from the angle of financial crime.
In its 2011 annual report, Tracfin (the French financial intelligence unit responsible for combating financial fraud, money laundering and terrorist financing) was the first French authority to mention Bitcoin.2 With Sumsub`s comprehensive AML/KYC solution, it is very easy to comply with the new French cryptography requirements. In this context, as we have already mentioned, the European Commission has published a Digital Financial Package that includes a proposal for a blockchain pilot project for market infrastructures to create a new exemption to support the development of registered financial securities on blockchains (see Section XI). The European Securities and Markets Authority (ESMA) also published a consultative paper on initial offers of coins and cryptoassets18, in which it discussed, inter alia, the legal qualification of cryptoassets in EU financial securities laws. 15 AMF, Review and Analysis of the Application of Financial Regulation to Security Tokens, www.amf-france.org/sites/default/files/2020-03/legal-analysis-security-tokens-amf-en_1.pdf. 5 AMF, “The AMF publishes a working document on initial coin offerings and launches its UNICORN programme”, 26. October 2017: www.amf-france.org/en_US/Actualites/Communiques-de-presse/AMF/annee-2017?docId=workspace%3A%2F%2FSpacesStore%2F5097c770-e3f7-40bb-81ce-db2c95e7bdae&langSwitch=true. In accordance with the Fifth Anti-Money Laundering Directive (“AMLD5”), cryptographic regulation focuses on AML/CFT obligations. The French Regulation applies to digital asset service providers defined by the MFC: (1) the custody of digital assets on behalf of third parties; (2) the purchase and sale of legal tender digital assets; (3) trading in digital assets; (4) the operation of a trading platform between users; and (5) other services (receiving and transmitting orders, portfolio management, financial advice on digital assets, etc.). In addition, crypto companies that register with the AMF must submit the following AML/CFT related documents: Following the announcement of the updated French crypto regulation, concerns have been raised about the higher costs for KYC compliance and customer onboarding. The bloc reported that while onboarding customers currently costs €1, companies were concerned that KYC measures would increase those costs to €5. As a solution to this problem, the use of third-party providers was authorized by law for the first time to streamline customer due diligence (CDD) and KYC for cryptography. Security tokens represent financial instruments or have the same characteristics.
The qualification of a security token is based on the European definition of a financial instrument that includes equity securities, bonds, shares of mutual funds and financial contracts.9 The absence of a legal entity (decentralised autonomous organisation, informal group) does not prevent the reclassification of security tokens in the presence of a de facto company.10 The AMF has several analyses on the compatibility of security tokens and security tokens. Security tokens Published offerings. (“STO”) with financial laws. Most primary market financial rules apply to securities brands, as the Prospectus Regulation may apply.
