Seen by many in North America and Asia as the most pro-regulation among the notoriously regulation-bound European Union states, France has recently overhauled its attitude to crypto to become more crypto-friendly, while introducing innovative legislation. In June 2021, France enacted new crypto regulations that impact not only French companies, but also international firms seeking to operate in France. The new rules signal the biggest shift in crypto rules since France began regulating the sector in 2019.
In addition to this new regulatory framework, France is pushing other European Union countries to adopt similar legislation, making these new regulations doubly significant. The new regulations take crypto services and trading platforms operating in France out of a legal grey area. From now on, they are subject to many of the same AML/KYC obligations and mandatory registration as fiat currencies.
France, Crypto, & KYC
Most significantly, the new rules allow companies to work with third parties to fulfil their KYC and KYB obligations. All companies accepting crypto transactions will now be subject to KYC and KYB regulations, including an absolute ban on all anonymous transactions using crypto – previously, any crypto transaction under €1000 was not subject to KYC regulation.
Companies operating in France and accepting crypto – or their outsourced providers of payment services – are now obliged to register with the Financial Markets Authority (AMF). However, the compliance procedure for these firms will be simplified, as the AMF will only be verifying managers and beneficial owners. Payment’s processors, and those undertaking KYC requirements for merchants, are now also subject to expanded anti-money laundering (AML) requirements, including registration of their beneficial owners, authentication of these owners, and ongoing transaction monitoring.
Vive La Revolution
There are early signs that the new crypto regulations are having a positive effect on the acceptance and usage of crypto in the country. Described by Forbes magazine as a “sleeping giant” of the crypto world, there are 25,000 merchants now accepting crypto in France. The French parliament also recently approved investments in crypto for use in life insurance contracts, and this month Le Figaro has reported that 30 retail chains in France would accept crypto from Spring 2022 via a strategic partnership between the Easy2Play payment platform, Global POS systems and the EasyWallet application. By itself, this will represent a huge uplift in the commercial use of crypto in France.
The implication is that companies doing business in France will have to prepare for handling crypto transactions, especially from a KYC and AML perspective. As we’ve seen in Switzerland and other European markets, once crypto is established, widespread adoption happens quickly, and companies should prepare for the special challenges associated with handling crypto transactions from a regulatory point of view. As crypto takes off, companies should prepare – including identifying third-party experts in KYC, AML and KYB legislation to help them respond to France’s new regulatory requirements related.
To discuss protecting crypto payments in your organisation, please contact us here.
