France warns EU crypto rules risk loopholes, may block cross-border licenses to ensure stricter oversight, consumer protection, and financial stability under MiCA.
France has issued a strong warning regarding the European Union’s new crypto regulations. The country is concerned that there are gaps in enforcement that could be used by cryptocurrency companies to skirt stringent regulations by exploiting weaker regulations in other EU countries. As a result, France could decide to block firms operating in the crypto onboard on doing business in their country in case the license they were issued outside France.
AMF Flags Risks in EU’s MiCA Crypto Regulation Framework
The warning was issued by the financial markets regulator of France, called the Autorite des Marchés Financiers (AMF). On Monday, AMF told Reuters the current framework under MiCA (Markets in Crypto-Assets Regulation is bringing significant risks). The AMF believes these gaps could affect the goals of MiCA, which was meant to be the first comprehensive crypto regulatory system in the world.
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MiCA officially comes into force this year, all 27 countries of the EU. It enables crypto companies to have a license in one EU country and subsequently “passport” it to operate in others.This system is supposed to simplify regulation, but France complains that it creates a regulatory loophole.
The AMF may check if companies target the “weakest link” among member states—places with looser rules or faster approvals. Once companies get a license there, they can operate across the entire EU, including France, without meeting the same high standards.
Because of these, France has discussions to block the passporting of licenses into its market. But that would mean companies licensed in other countries in the EU would be prohibited from operating in France, except where they were subject to specific regulatory conditions laid down in French regulations.
France Aims to Tighten Crypto Controls Amid MiCA Rollout
Meanwhile, France is advocating for increased central oversight of the crypto industry. Along with Austria and Italy, France is calling for European Securities and Markets Authority (ESMA) to take on the role of oversight of big crypto firms. Such would help ensure more constant regulation across EU and also ensure less risk of regulatory arbitrage.
This development undervalues the tension between the national regulators and the EU-wide frameworks. While MiCA is supposed to make the crypto market consistent, there are already differences in the ways each country interprets and enforces regulations that are causing friction.
The aim for France is very clear: block the efforts of crypto companies to exploit inconsistencies between regulations, and safeguarding the integrity of the financial system. With demands for greater oversight, France is seeking to encourage the MiCA framework, while ensuring that it is working as planned.
Furthermore, the move sends a message to other EU countries that license fast-tracking without proper checks could harm the region as a whole. France is not opposed to crypto innovation, but it does want to see to it for which innovation need not come at the expense of consumer protection and financial stability.
In conclusion, France’s warning signals that the fight for regulatory control in the crypto market in Europe is far from over. As MiCA continues rolling out, it becomes possible that further clashes will arise between national and EU authorities on how best to regulate the fast-growing crypto industry.