France May Block Crypto Firms Licensed in Other EU Countries Over Regulatory Concerns

France’s financial regulator, the Autorité des marchés financiers (AMF), has raised concerns about the passporting system under the EU’s upcoming Markets in Crypto-Assets regulation (MiCA). This system allows cryptocurrency firms licensed in one EU country to operate across the EU without obtaining separate licenses. The AMF believes that this could create regulatory gaps, enabling crypto firms from less stringent jurisdictions to operate in France without adhering to its higher standards.

MiCA aims to establish a unified regulatory framework across the European Union for crypto-assets by introducing common rules for crypto service providers, enhancing investor protection, and increasing market transparency. However, the AMF warns that the current draft of MiCA might leave loopholes that could undermine France’s stricter regulatory approach and increase risks to investors.

The AMF is considering measures to block crypto companies licensed in other EU countries from operating in France if their concerns about the passporting system are not addressed. This decision highlights France’s commitment to maintaining the integrity of its financial markets by potentially restricting passporting rights for certain crypto firms.

Key implications of France’s stance include:

• Crypto firms affected might need to obtain direct licensing from French authorities.
• This could lead to increased compliance costs and operational complexity for these companies.
• The move may drive higher regulatory standards and safer practices in the crypto market.

Industry experts believe France’s position could ignite wider debate across the EU on the implementation and enforcement of MiCA. While some member states may push for stricter safeguards, others could favor more flexible regulations to foster innovation.

Overall, France’s regulatory approach underscores the challenges the EU faces in balancing the promotion of crypto innovation with the essential need for investor protection. As MiCA progresses, it remains crucial to monitor how member states resolve these important regulatory issues.

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