French Central Bank Seeks Stricter Crypto Regulations in EU

• Bank of France Governor Francois Villeroy de Galhau has suggested stricter regulatory standards for cryptocurrency firms.
• The Financial Markets Authority (AMF) requires registration of all cryptocurrency businesses offering custody and trading services.
• The Markets in the Crypto Assets bill (MiCA) has been the subject of great deliberations in the EU parliament since September 2020.

The regulation of cryptocurrency firms in Europe is facing a potential setback as Bank of France Governor Francois Villeroy de Galhau has suggested stricter regulatory standards. In a speech on Jan 5th, Villeroy said that due to the recent volatility in the market, France should impose stringent licensing requirements on Digital Asset Service Providers (DASP) before the European crypto regulations (MiCA) take full effect in 2024.

The Financial Markets Authority (AMF) requires registration of all cryptocurrency businesses offering custody and trading services, but so far only about 60 crypto entities, including Binance Holdings, have obtained the AMF registration. The optional DASP license has yet to be applied, and the central bank head has requested for a regulatory framework for DASP’s to be in place by 2023.

The current France law allows for all unlicensed firms to operate until 2026, so the MiCA, if passed in 2024, would have no effect. The MiCA bill has been under great deliberations in the EU parliament since September 2020, with the EU Council, European Commission, and European Parliament all having their say. The bill seeks to provide a unified framework to regulate the crypto industry across the European Union, including provisions on market integrity and investor protection.

Hervé Maurey, a member of the Senate Finance Commission, had proposed an amendment to remove the provision which allowed businesses to operate without a license, but this has been met with resistance. With the French central bank now pushing for stricter regulations, it is yet to be seen what the outcome of the deliberations will be. Nevertheless, it is clear that the crypto sector is facing a potential setback in its attempt to establish itself in Europe.

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