French lawmakers have voted for new proposed laws that establish a stricter regulation regime for digital assets. The new laws require virtual asset service providers (VASPs) to maintain robust cybersecurity, anti-money laundering, and asset segregation programs, but is a let-off from the initial proposed regulatory regime.
Reports of the new laws surfaced two weeks ago, with the Senate voting for the draft bill on February 16. The National Assembly followed suit on February 28, with lawmakers voting 109-71 in favor of the new regime.
The bill is now with President Emmanuel Macron, who has two weeks to either sign it into law or veto it and send it back to parliament. Macron has voiced his support for strict regulations in the past, including the Markets in Crypto Assets (MiCA) framework, and many expect him to sign the bill into law.
New Laws for Digital Assets in France
The new laws are a step down from the regulations initially proposed by Senate Finance Commission member Hervé Maurey in December. On the back of the FTX collapse, the legislator proposed that VASPs be required to obtain a full license before serving French investors.
In France, VASPs can operate if they register with the financial watchdog, the Autorité des Marchés Financiers (AMF). This registration is fairly easy, and so far, 60 VASPs have registered. However, obtaining a full license is much more onerous and would involve many of the checks the AMF applies to traditional financial institutions.
The new laws will require VASPs to meet moderate standards, such as having robust AML and cybersecurity programs. They must also segregate user funds and provide more detailed risk and operations disclosures.
The Looming MiCA Framework
While this draft bill will potentially be a big step for the French digital asset industry, the biggest shakeup will be from the looming MiCA framework. MiCA, set to face a vote in April, will greatly impact stablecoins, NFTs, digital asset exchanges, and other VASPs. It will require greater transparency, asset segregation, advanced custody solutions, and introduce a universal licensing regime for EU countries.
MiCA will be a major milestone for the digital asset industry in terms of creating a sound regulatory framework for digital assets in Europe. It is designed to provide clarity and a level playing field for all market participants. The proposed framework will apply to issuers and service providers of digital assets, including custodians, trading platforms, and wallet providers.
MiCA is backed by the European Commission, which has said that the new framework will aim to protect consumers, safeguard market integrity and make it easier for companies to access the EU market.
Under MiCA, stablecoin issuers will be required to seek authorisation from a competent authority before launching their product. The competent authority will be responsible for checking the stablecoin issuer’s compliance with the regulatory framework’s requirements.
NFTs and other security tokens will be also subject to the MiCA Regulation, which sets out some general principles and requirements for issuers and service providers of digital assets. The MiCA framework is a positive step towards creating a more comprehensive and unified regulatory framework for digital assets in Europe.
Conclusion
The French draft bill proposed last month that aims to establish a stricter regulation regime for digital assets would require virtual asset service providers (VASPs) to maintain robust cybersecurity, anti-money laundering, and asset segregation programs. If signed into law, the new laws will take effect mid this year.
The new laws are a step down from the regulations initially proposed by the Senate Finance Commission. However, these new laws will help bring regulatory clarity and oversight to the French digital asset industry.
The biggest regulatory shakeup in Europe in terms of digital assets regulation will be from the looming MiCA framework. MiCA will provide clarity, a level playing field and ease of access for companies in the EU market. MiCA will go a long way in creating a comprehensive and unified regulatory framework for digital assets through Europe.
