France has signaled a potential move to restrict cryptocurrency firms that, while licensed in other European nations, seek to operate within its borders. This action raises concerns about potential loopholes and inconsistent enforcement within the European Union’s recently implemented crypto regulations.
The Autorité des Marchés Financiers (AMF), France’s financial regulatory body, expressed its worries to Reuters on Monday regarding possible weaknesses in the enforcement of the Markets in Crypto-Assets Regulation (MiCA). MiCA represents the world’s first attempt at a comprehensive legal framework for the crypto sector.
The AMF is concerned that crypto businesses might strategically acquire licenses in EU countries with less stringent requirements. To address this, they are contemplating barring companies from using MiCA licenses obtained elsewhere to operate in France.
Marie-Anne Barbat-Layani, who heads the AMF, told Reuters, “We are considering the possibility of denying the EU passport.” She described such a measure as highly complex, comparing its impact to an “atomic weapon” on the market.
She further added that crypto businesses appear to be searching for a “weak link” among European jurisdictions – a place where they can secure a license with minimal obligations.
MiCA, which became effective for crypto service providers in December 2024, allows companies authorized in one EU member state to “passport” their services across the entire 27-nation bloc. France’s cautionary stance underscores fears that diverging standards could undermine the entire MiCA framework.
Related: MiCA can attract more crypto investment despite overregulation concerns
France, Austria, Italy call for ESMA supervision of major crypto companies
According to Reuters, citing a position paper viewed by its reporters, France has joined Austria and Italy in advocating for the European Securities and Markets Authority (ESMA), based in Paris, to oversee major cryptocurrency companies.
The Financial Market Authority of Austria and Italy’s Commissione Nazionale per le Società e la Borsa (financial markets regulator) have also called for supervisory responsibilities to be shifted to ESMA.
In addition to the above, the three nations support changes to MiCA that would include enhanced cybersecurity oversight, tougher regulations for cryptocurrency activities conducted outside of the EU, and an examination of the regulation of new token offerings.
Related: SEC chair promises notice before enforcement for crypto businesses: FT
These discussions follow increasing concerns regarding Malta’s approach to crypto licensing. In July, ESMA published a peer review of the Malta Financial Services Authority’s (MFSA) authorization process for a specific crypto service provider, concluding that the regulator only “partially met expectations.”
Following the review, ESMA’s Peer Review Committee (PRC) advised the MFSA to “assess material issues that were pending at the date of the authorization or that have not been adequately considered at the authorization stage.”
The PRC also stated that Malta’s MFSA “needs to monitor closely the growth in authorization applications” and promptly adjust its supervisory practices as needed.
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