Following the trend of global jurisdictions to amend crypto regulations, France’s central bank governor highlights the urgent need for stringent crypto regulations in the country.
While expressing his thoughts in a speech he made in Paris on January 5, the governor of the Bank of France, Francois Villeroy de Galhau, pointed toward the ongoing market volatility as a reason and pushed to implement an obligatory licensing system “as soon as possible.”
The recent FTX bankruptcy in November of last year worsened the situation in the crypto industry. Alongside changing investors’ views on virtual assets, the unrest in the crypto market caused by the exchange’s collapse led many countries to apply stricter regulations.
In 2020, the European Union decided to prepare comprehensive crypto rules to meet the ever-changing needs for crypto regulations. But, the Markets in Crypto Assets (MiCA) bill is expected to come into force in 2024. Therefore, European crypto companies can legally operate without acquiring a license until the MiCA regulation is enacted and provides a licensing regime.
FTX Aftermath Led France To Enact Strict Crypto Licensing
Similarly, the financial head of France wants to remove that clause and suggested making it compulsory for each crypto firm to acquire a DASP license to operate in France.
He noted in a statement:
All the disorder in 2022 feeds a simple belief: it is desirable for France to move to an obligatory licensing of DASP as soon as possible, rather than just registration.
In waiting for the MiCA standards, obtaining a Digital Assets Service Provider (DASP) license is optional in France at the time. The EU parliament has exempted crypto companies from licensing until 2026 when EU crypto rules will provide a new licensing regime.
This is what the governor wanted to change, considering the mismanagement of crypto platforms that led to their bankruptcy. Likewise, around 60 crypto companies have registered under the financial market authority, but they have yet to win a DASP license.
Notably, acquiring a DASP license will make crypto firms disclose more in-depth business information, eliminating risk. The DASP license will require platforms to report financial, conduct, and business information to the government agency.
French Finance Commission Proposed Amendment In December 2022
The governor is not the first to criticize the clause allowing crypto companies to run their business with minimum regulatory interaction. Seeing the FTX crisis, Hervé Maurey, a Senate finance commission member, had already proposed in December last year to remove the clause allowing crypto service providers to operate with minor regulatory interaction till 2026.
While speaking to the Financial Times in mid-December, Hervé Maurey shed light on the need for tighter crypto regulation and noted in a statement:
The FTX collapse was a detonation [that] contributed to a moment of reckoning and awareness,” Maurey told the Financial Times. “This led a number of players within the French system to consider that things needed to be supervised more tightly.
Featured image from Pixabay and chart from TradingView.com.
Source: https://bitcoinist.com/why-bank-of-france-stringent-crypto-licensing/