The global landscape of cryptocurrency is evolving, and France is stepping up its game in overseeing digital assets. This initiative underscores a strict approach towards cryptocurrency firms that plan to operate within the French market, especially those licensed in different European Union (EU) regions.

Under the leadership of Marie-Anne Barbat-Layani, the head of France’s financial authority, this movement is aimed at transitioning regulatory power to the European Securities and Markets Authority (ESMA), which is headquartered in Paris, providing a centralized supervisory framework.

France Advocates for Unified Crypto Regulation

As reported by industry sources, the catalyst for this decisive action arises from mounting concerns regarding the EU’s new regulatory structure, known as the Markets in Crypto-Assets (MiCA) regulation. The apprehension stems from a potential trend where cryptocurrency firms are leaning toward jurisdictions that offer easier licensing routes.

Barbat-Layani has highlighted alarming discrepancies among national regulators, warning that the lack of uniform application of the new guidelines could lead to oversight gaps when it comes to cross-border crypto operations.

In this collaborative endeavor, France is banding together with Italy and Austria, urging ESMA to take over supervisory duties for significant crypto entities. A recent position paper underscores their joint worries about the current regulatory climate.

With a firm stance, Barbat-Layani indicated that France is ready to utilize what she referred to as an “atomic weapon”—the potential to challenge the legitimacy of licenses issued by other EU nations.

This approach could jeopardize the existing “passporting” system that allows companies licensed in one member state to function across the entire European Union.

Additionally, Barbat-Layani has raised the issue of “regulatory shopping,” where crypto businesses target nations with lax regulations to obtain licenses more easily.

Collaborative Efforts to Reform MiCA Guidelines

The push for tighter regulations arrives in the wake of a review conducted by ESMA, which pinpointed various national regulators, such as Malta, facing criticism for their licensing policies. Some evaluations highlighted a lack of rigorous risk analysis during the licensing process for crypto enterprises.

Currently, crypto firms are navigating the application process for MiCA licenses, with countries like Luxembourg and Malta already dispelling permits to major exchanges, including Coinbase (COIN) and Gemini (GEMI).

Nonetheless, regulators from France, Italy, and Austria are calling for adjustments to the MiCA framework. The proposed changes aim to tighten regulations on crypto operations outside of the EU, bolster cybersecurity protocols, and overhaul the management of newly introduced digital asset projects.

France has been a strong proponent for amplifying the regulatory capabilities of ESMA, a view that resonates with ESMA’s top official, Verena Ross. However, this initiative faces pushback from several EU member states, indicating that aligning on regulatory policies for digital assets will not be straightforward.

Image credit: DALL-E, data sourced from TradingView.com