France Enhances Cryptocurrency Oversight from June 2021: A Compliance Guide
In a significant move to bolster its financial system's security and transparency, France has enacted new regulations for digital asset service providers (DASPs) operating within its borders. The ordinance, Ordinance No 2020-1544, was issued on December 9, 2020, and came into effect on June 9, 2021 [1][2].
The new regulations, which mark the biggest shift in crypto rules since France began regulating the sector in 2019, require mandatory registration for crypto firms providing key digital asset services such as custody, buying or selling digital assets against legal tender, exchanging one digital asset for another, and operating a digital assets trading platform [1]. These firms must register with the French Financial Markets Authority (AMF) before conducting such activities [1].
Registration under this ordinance involves thorough verification, including compliance with AML/CFT regulations, ensuring that the management and beneficial owners meet standards of honorability and competence, and subjecting the applicants to review and approval by the AMF in coordination with the Autorité de contrôle prudentiel et de résolution (ACPR) [1].
The new rules aim to strengthen AML and CFT controls specifically for crypto firms by making registration mandatory and enhancing the supervision of these entities' governance and operations [1][2]. They also enforce the full implementation of anti-money laundering, counter-terrorism financing, and asset freezing obligations for all registered service providers [1][2].
Failure to register or providing false information during the registration procedure could result in a one-year imprisonment and a fine of €15,000. For more severe offences, such as failing to register with the AMF and lying about this to clients, the penalties are increased to a two-year imprisonment and a fine of €30,000 [1][2].
The new regulations impact not only French companies but also international crypto firms operating in France. Crypto providers from outside the EU/EEA that do not register will be prohibited from communicating with French clients or conducting promotional activities targeting them [1].
Registration with the AMF for foreign crypto providers must be done by setting up a branch in France or a Member State of the EU/EEA, which includes getting a local address and hiring a representative [1]. The AMF offers optional licenses to crypto firms, which can allow them to apply for French bank accounts and have distinct reputational advantages [1].
Each client must go through a reliable KYC check with two forms of ID verification, regardless of the transaction amount. Crypto firms holding an optional license from the AMF must publish their pricing policies on their website and inform clients about the risks associated with cryptocurrencies [1].
Staying compliant with the new French crypto requirements is easier with Sumsub's complete AML/KYC solution. The new regulations apply to all crypto firms operating in France, including crypto-to-crypto exchanges and trading platforms [1].
This ordinance is central to France's approach to regulating crypto activities and ensuring these firms operate transparently and securely within the financial system [1][2]. As the crypto industry continues to grow, it is expected that more countries will follow France's lead in strengthening regulations to protect their financial systems and combat money laundering and terrorism financing.
References: [1] Ordinance No 2020-1544, dated December 9, 2020, on the strengthening of the regulatory framework for anti-money laundering (AML) and counter-financing of terrorism (CFT) as it applies to digital assets and firms operating in the crypto sector. [2] French Financial Markets Authority (AMF) website: https://www.amf-france.org/ [3] Autorité de contrôle prudentiel et de résolution (ACPR) website: https://www.acpr.banque-france.fr/ [4] Sumsub website: https://sumsub.com/
- The new regulations, enacted by France, require crypto firms operating within its borders to register with the French Financial Markets Authority (AMF) and adhere to stringent AML/CFT regulations, as they engage in business activities such as custody, finance, and trading of digital assets.
- In an effort to strengthen AML and CFT controls for crypto firms and ensure industry finance operates within the framework of the country's financial system, registration under the Ordinance No 2020-1544 is mandatory for both domestic and international crypto service providers.
