Regulating Security-Tokens in France

Planning to register a crypto exchange in the EU? This article might be in handy.  Fist of all, pay close attention to the fact that France has recently become one of the leaders in ‘tokenization’ among the countries of the European Union. 

France has become in the lead of crypto assets regulation initiatives, in particular thanks to the PACTE law. This law is also called Law on Business Growth and Transformation and aims to remove obstacles to the growth and transformation of companies, with a special emphasis on making corporations pay more attention to social and environmental issues.

In this article, we will examine how the new law will affect financial business in France, in particular, the rapidly developing Security-Tokens market in this country.

Crypto Asset Regulation in France

The new PACTE law is aimed, among other things, at creating conditions for enabling companies to be more innovative, and not to impede this. However, it turned out that there are still some obstacles in this way. They are related to the fact that the demand for the issue of tokens using blockchain technology is growing steadily both in France and throughout Europe.

The French Financial Markets Authority (AMF) has identified gaps in legislation that could potentially become an obstacle to the quality regulation of security tokens (STOs) in accordance with the provisions of the new law.

Liberalizing STO

Therefore, it was decided that regulators should abandon certain regulatory requirements in order to liberalize the market. This means that asset management rules should not impede the development of products and markets for security tokens in the EU, and in practice, registered French asset management companies undertake to obtain a license from AMF to provide such services.

In the EU, it is even planned to establish a special laboratory in order to intensify the development of digital services. However, a reservation should be made that the removal of obstacles to the development of the STO sphere will not occur without creating conditions that strengthen the protection of the interests of customers.

Now, platforms providing investment services for STO will have to apply for a financial license in France as an investment service provider or financial adviser (depending on the types and functions of security tokens).

In addition, those interested in setting up a cryptocurrency exchange in France should bear in mind that secondary trading of security tokens in the EU may trigger licensing requirements in accordance with the MiFID II Directive.

Crypto business owners should also closely monitor other innovations in the STO regulatory framework in Europe. However, you can also entrust this to professionals. IQ Decision UK lawyers constantly monitor and analyze regulatory processes related to financial markets. You can get answers to all your questions by registering for legal consultation on the crypto assets regulation in the EU with our specialists.