Another country expresses goodwill towards encrypted assets, and the road to ICO legalization ushers in a turning point

France’s financial market watchdog, the Autorité des Marchés Financiers (AMF), is drafting a regulatory framework that aims to eliminate “banking ties,” a longstanding point of contention facing these startups.Under this framework, companies that choose to be regulated have a bank account.This is a far cry from the regulation of blockchain-related projects in the United States, where warnings about “reputational risks” have implicitly prevented banks from offering deposit accounts to digital currency businesses.How does the regulatory framework being drafted in France treat blockchain-related projects and encrypted assets?

Supervision and Support

Domitille Dessertine, head of the AMF’s Fintech Innovation and Competitiveness Unit, said the “strong feedback” from crypto players on the need for adequate banking was matched by a firm consensus among French authorities to eliminate “banking ties.” The French government and lawmakers "are very supportive of the right to open a bank account as long as you are regulated."Under regulatory bills being drafted, banks will now have the onus on explaining why they are not serving start-ups."The relationship between the project and the banks is still contractual, but if the banks refuse, they will need to prove to us why they refused to open the bank account," she explained.

Dessertine said crowdfunding could be compared to a few years ago, when banks were reluctant to open accounts for such platforms because the money came from the internet. Today however that approach is fine, she noted that "all types of banks, big and small", will be subject to the new rules.

But this is only part of a wide-ranging blockchain bill passed by the French National Assembly on April 11.As part of the "PACTE Act", the government plans to create a new legal environment that is more conducive to the growth of small and medium-sized enterprises (SMEs). Firms and custodians) offer the option to obtain a "visa" to operate in France.

Emilien Bernard-Alzias, a partner at law firm Simmons & Simmons, noted that the French parliament, and especially its so-called “crypto representatives,” hope to make life easier for crypto entrepreneurs for a while.“Before the PATTE law, it was a fight for crypto-related businesses to open bank accounts with a French bank. But French banks that are now refusing to open accounts will have to explain to French regulators why they are refusing to open accounts, and we bet they will Avoid such discussions with French regulators."

Issuing encryption licenses

Enthusiasm at the top for France's new encryption rules is palpable.Last week, French Finance Minister Bruno Le Maire proposed at the Paris Blockchain Summit that the European Union (EU) should use the bill as a model, "inspired by the French experience, to Cryptoassets establish a single regulatory framework”. While the formal application process for French businesses to receive optional certification won’t open until after this summer, Dessertine said there has already been a lot of interest, with 20 to 30 digital assets including “large and small exchanges.” The service provider has been contacted.

Dessertine explained that the framework will become operational following the publication of the implementing decree, which will be implemented over the next few months. she says:“We hope that the bill will come into force in May or June at the latest. We expect the application process for ICOs to be operational in September, and intermediary licenses are expected to be operational by the end of the year, maybe a little earlier.”

Dessertine said,French regulators have also been careful to make encryption licenses optional to avoid hampering innovation in this fast-growing field. and added: "Some business models may not fit within the regulatory framework. I'm thinking of completely decentralized projects, where you don't even have an identified corporate issuer, the real community is a group of people working together.”

Bernard-Alzias also agrees with this view,He said:"He said:"Neither PATTE Law nor the AMF want to force people to seek one of the optional licenses, but if crypto-related companies want to take advantage of these optional licenses to appear more reliable and gain new customers or partners, they can do so. ’ He also said, ‘Very amazingly, this works! Many crypto firms already want these optional licenses, although the AMF does not have until September to grant them them. "

Funds are allowed to invest in crypto assets

Another notable change is the ability of France’s insurance fund, worth around $2.5 trillion, to take on more crypto assets.The "PATTE Law" allows French hedge funds-specialized funds (FPSS) to enjoy greater freedom to invest on behalf of the life insurance office.

However, according to French legal experts,Such a major shift may take time. Hubert De Vauplan, partner at Kramer Levin Naftalis & Frankel law firm, said, "Because of the new PACTE law, it may be possible for life insurance offices to invest in the encryption field, but to be honest, this is only theoretical at the moment." De Vauplane emphasized somePractical obstacles, such as the lack of institutional-grade custody solutions for crypto assets.Under EU regulations (Alternative Investment Funds or AIFs) and French law, certain types of funds can hold assets registered on the blockchain, including crypto assets.

At the same time, De Vauplane pointed out that “if a life insurance company wants to sell encrypted life insurance products (which is allowed), it can only do so through AIF/FPS funds. There is not yet a custodian fund in France that is willing to accept “retaining” encrypted assets. But It is safe to say that this proposal will come soon."

Probably to test the waters,A subsidiary of French financial giant Societe Generale recently issued about $112 million worth of bonds (a traditional European instrument similar to mortgage-backed securities) in the form of security tokens on the public ethereum blockchain. ).

According to a report by Moody's Investors Service,Although Société Générale itself is the sole investor in the offering, it ranks ("equally" with respect to repayment priorities) with other secured bonds, suggesting the bank can later sell them in the secondary market .Moody's noted that Societe Generale took advantage of a 2017 decree recognizing blockchain as an effective system of record for securities.

The new rules also encourage greater involvement of French private equity or venture capital funds in ICO tokens, allowing them to invest up to 20% of their assets under management (AUM) in crypto assets.

France is very different from the US in its approach to ICOs.Reference article:

Reference article:

[1] French Lender Societe Generale Issues $112 Million Bond on Ethereum

[2] Banks Can’t Snub Crypto Startups Thanks to France’s New Blockchain Law

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