- France’s financial regulatory body has indicated to Reuters that it might not acknowledge licenses issued in other EU nations. The concern arises from perceived inconsistencies in how EU licensing regulations are being implemented across the bloc.
- The standard procedure under both MiCA regulations and wider EU law is that a license granted in one member country is typically recognized as valid throughout the EU, facilitating cross-border operations for businesses.
- These statements emerge as the EU contemplates shifting some authority over securities market oversight from individual national regulatory bodies to a centralized EU entity.
The French securities authority is considering potentially preventing businesses licensed in other EU countries from conducting operations within France, according to recent remarks from its leadership.
Such a move by France would be significant. Within the EU’s single market framework, companies are generally permitted to operate across all member states, given they possess a valid license from at least one member nation. This system is commonly referred to as “passporting.”
Marie-Anne Barbat-Layani, who heads the French Financial Markets Authority (AMF), stated to Reuters that they “do not rule out the possibility of refusing the EU passport.”
“Legally, it’s a complex issue, and it sends a negative message about the single market—almost like deploying an ‘atomic weapon.’ However, it’s a potential course of action we’re keeping in reserve.”
The potential action is being weighed as a response to what Barbat-Layani termed “regulatory shopping,” where companies seek “a lenient jurisdiction that grants licenses with fewer stringent requirements compared to others.”
While EU directives are designed to be consistently enforced across all member states, the reality is that individual countries have some degree of discretion in their application.
A clear illustration of this is seen in the implementation of the highly anticipated Markets in Crypto-Assets Regulation (MiCA). This comprehensive EU regulatory framework for digital assets, grants member states leeway in determining their own transition periods and largely defers taxation matters to their individual policies.
However, licensing processes are among the more precisely defined aspects of MiCA and are outlined in Article 62 of the legislation. This section details the necessary components of a licensing application. Member states primarily retain the power to decide how to handle firms already operating under national licenses; they are allowed to establish their own “simplified” procedures for these entities.
It is plausible that Barbat-Layani is alluding to these specific types of businesses, although she did not cite specific instances in her conversation with Reuters.
Concerns have surfaced suggesting that national regulatory bodies are not applying MiCA’s regulations consistently, despite its strict requirements. Earlier in the year, the European Securities Market Authority (ESMA) criticized the Malta Financial Services Authority (MFSA) for its allegedly inadequate evaluation of licensing applications.
The MFSA critique has fueled a broader debate regarding the proper role of national regulators in overseeing digital assets within the EU. Although MiCA intended for local regulators to manage supervision, several member states, including France, are advocating for a transfer of these responsibilities to ESMA.
Unsurprisingly, this view is not shared universally among member states. Shortly after Bloomberg reported the AMF’s openness to relinquishing authority to Brussels, the Prime Minister of Luxembourg published an opinion piece in the Financial Times, arguing in favor of a decentralized supervisory model that utilizes the expertise of national bodies.
The AMF’s comments are likely to reignite discussions among EU member nations and initiate a review of how effectively the EU-wide MiCA framework has been implemented to date.
Watch: Future-proof data governance with Pieter Den Dooven
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