Bank of France governor calls for the country to establish crypto regulations ahead of the MiCA

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(Kitco News) – Bank of France governor Francois Villeroy de Galhau has called for the country to increase its scrutiny of crypto companies that operate in the nation on its own instead of waiting for the implementation of the EU-wide Markets in Crypto-Assets (MiCA) regulation, which lays out a framework for how the region will regulate the cryptocurrency sector.

The comments from Villeroy came during a speech on Thursday, where the central bank governor cited the current volatility and downturns in the crypto market as the reason to establish clear regulations as soon as possible.

“The disruption seen in 2022 is nourishing one basic conviction: France should switch as soon as possible to the compulsory authorization of DASPs (digital asset service providers) rather than simply requiring their registration,” Villeroy said. “And this needs to happen well before MiCA enters into force, to create the necessary framework of trust.”

In November, legislators in the European Union elected to postpone the vote on the Markets in Crypto Assets Bill (MiCA) until February 2023, which means that the earliest it will come into force will be February 2024.

Provisions in MiCA include the requirement for crypto companies, such as wallet providers and exchanges, to seek authorization from national regulators, which is the process that France wants to initiate on its own. Currently, obtaining a license for DASP in France is optional. Villeroy wants to make it mandatory for any crypto firms willing to operate in France.

At present, the majority of crypto service providers operating in France do not hold a DASP license. Most have instead opted to use the simplified registration process offered by the country’s financial regulator, the Autorité des Marchés Financiers (AMF).

The November collapse of the cryptocurrency exchange FTX has led policymakers around the world to call for the rapid establishment of regulations for cryptocurrency firms in a bid to help protect the public. Many have claimed that had the MiCA already been in effect, it could have possibly mitigated the impact that the FTX collapse had on Europeans.

During a conversation with the Financial Times (FT), French Senate member Hervé Maurey – who is a member of the finance commission – said that the FTX collapse “was a detonation [that] contributed to a moment of reckoning and awareness. This led a number of players within the French system to consider that things needed to be supervised more tightly.”

In December, Maurey proposed an amendment to legislation that would eliminate a clause that would enable registered cryptocurrency companies to operate domestically without a full regulatory license until 2026. The proposal would require companies to obtain a license from the AMF beginning in October 2023.

According to Maurey, a DASP license would help provide consumers with a greater level of protection and would require crypto firms to disclose more information relating to their financial health and systems of control.

Maurey’s amendment was ultimately adopted by the Senate and is set to be examined by France’s parliament sometime in January.