Long considered anti-crypto, France is now a major headline in Europe. The interest of Binance and the arrival of Crypto.com are proof of this.
“We want France to be the European hub of the crypto-asset ecosystem.” This sentence is not that of a crypto influencer, the CEO of one unicorn French in the sector or a bitcoin miner. This is what the Minister of Economy, Bruno Le Maire, said in an interview given to our colleagues from BFM this Monday, October 18, 2022.
The minister’s quote may surprise you given his statements in recent years (“Les cryptocurrencies present a real problem of terrorist financing”, in particular). However, when one is an observer behind the scenes, it is not surprising. The French ecosystem has done everything to reconcile the political world with the sector of digital assets, in particular. thanks to the work of the Association for the Development of Digital Assets (Adan). interviewed its presidentFaustine Fleuret, last year.
If everything is far from being resolved, the political will is real. A will that we add to a fairly clear legal framework. That’s what convinced Singaporean exchange Crypto.com to create it the future European headquarters.
An established legal framework
PSAN, a strict but clear status for Web3
Precisely in terms of taxation, the first provisions regarding cryptocurrencies were taken, since the finance law of 2018. flat tax 30% and two taxable facts, the tax is already clear, at least for individuals. However, the state wanted to go further.
Marked by the performance of 2017-2018 and the numerous frauds of that time, the legislator wanted to create a specific status, PSAN (Digital Asset Service Provider). Issued by the Autorité des Marchés Financiers (AMF), it is a mandatory registration for French companies and foreign companies that want to promote themselves to the French public when, in particular, they allow the exchange of cryptocurrencies.
Although innovative, since it was the first status of its kind for the Web3 sector, PSAN was seen as a burden by the ecosystem. This is what came out of Adan’s work earlier in the year. Since then, many things have improved, notably with an average file processing time dropping from 18 to 6 months.
On the other hand, what has never changed is the clarity of the PSAN status. All players know that it is the security mechanisms and the fight against money laundering and terrorist financing (LCB-FT) that will be checked as a priority by the Authority for Prudential Supervision and Resolution (ACPR). Likewise, everyone knows whether they should take it or not. PSAN is also included in the European MiCA regulation.
MiCA, the dedication of French law on a European scale
In mid-October, the European Parliament finally approved the MiCA regulation and the modification of the TFR regulation. If some provisions cause some teeth to be clenched in the sector, it is the first clear legal framework of Web3 for such a wide and important territory. And we owe it, in part, to France.
First of all, during the French presidency of the European Union, in the first half of 2022, the most important discussions took place and the approval of the final version of the two regulations. Therefore, there was a clear political will for France to stand behind future European regulations applicable to crypto-assets.
In addition, some of the European provisions are inspired by the French. Of course we are thinking about CASP (Crypto-asset service provider), the European PSAN. In addition, France has postponed the French PSANs registered or approved at the time of entry into application of the MiCA in 2024 to more easily obtain the European PSAN.
Finally, it was France that pushed for the exclusion of decentralized finance (DeFi) from future regulations. In summary, a good part of the future European law applicable to digital assets is directly or indirectly inspired by France.
However, the French experience in terms of cryptos may come into play when major sectors will need to establish a European headquarters. Crypto.com’s mid-October announcement is thus a semi-surprise, and follows the creation in France of an SAS by Binance in the fall of 2021.
New: political support
From a long period of mutual mistrust…
Although French law has been clear for some time and European law is inspired by it, there was still a major problem: political support. Indeed, despite the positive speeches from time to time or the fight in favor of the sector of the former deputy of Paris Pierre Person, there has clearly been a communication problem between the ecosystem and the politicians.
The high point was in the fall of 2020. First of all, a Syrian terrorist network was dismantled, partially financed by bitcoin coupons sold in tobacco shops. Then Professor Samuel Paty was killed. A priori, there is no connection between the two. However, the government will in a few weeks pass several decrees and ordinances aimed at financing terrorism. Among them,order of December 9, 2020.
In presenting this order, Bruno Le Maire explicitly linked crypto-assets and terrorist financing, without adding the necessary nuances. This was followed by an outcry from the crypto ecosystem. The order has tightened the conditions for obtaining PSAN AND blocked the bankswhich no longer accepted the opening of a bank account for French PSANs.
2021 has been a long period of mistrust between politicians and the crypto ecosystem, many of whom have considered moving overseas. Some have even taken this step.
… in a desire to attract the big players in the sector
It was the 2022 presidential election that changed everything. On the one hand, Adan wanted to ask the candidates about their vision of digital assets and their program. On the other hand, during the rounds in between, Emmanuel Macron expressed his desire to make France a Web3 stronghold.
As a result, Elisabeth Borne’s government updates the ministry in charge of Digitalb, headed by Jean-Noël Barrot. Contrary to the pro-cryptos, the minister enjoys a very good relationship with Adan and is working to make France a stronghold in this sector. What does it highlight? Clear legal framework of the country! This positive vision has attracted the giant Binance, which has planned investments in the French sector, Crypto.com and some rumors herald the arrival of Coinbase, at least as one of the next PSANs.
In his interview, Bruno Le Maire went even further, positioning himself on NFTs and decentralized finance. He wants France to pioneer both. If actions follow words, we can be very optimistic about the future of Web3 in France.