Cryptocurrency Regulations in France
Within the EU, there are several countries that have favorable regulations for cryptocurrency, but one of the best is undoubtedly France. Not only is cryptocurrency use encouraged for businesses, but it is also highly regulated to ensure user safety.
In France, cryptocurrency is mostly legal, with a few restrictions. Keep reading to learn all about the cryptocurrency regulations in France and what we believe may be coming next.
Was France Always Supportive of Cryptocurrency?
Like most countries around the world, France was, in the beginning, skeptical about the safety and use cases of cryptocurrency. However, as more studies emerged, they became more accepting and by 2019, they made world news as one of the first countries to recognize cryptocurrency businesses (other than Switzerland, of course).
This brought many blockchain companies to the country, though many would end up leaving for other EU locations with lower taxes later. Regardless, they have been a pioneer on the crypto frontier for many years.
France Cryptocurrency Regulations
Below, we sum up the basic cryptocurrency regulations in France. Note that these are not complete explanations, and, as always, be sure to ask a legal professional about any legal questions you may have.
1. Crypto Exchanges and Service Firms Are Legal with Registration
Any cryptocurrency firms or exchanges operating within France need to register as Digital Asset Service Providers with the AMF. Prior to registering, these companies need to demonstrate strong governance practices, sufficient cybersecurity, and a full explanation of consumer safeguards in place.
2. All Cryptocurrency/Blockchain Companies Must Follow AML and KYC Requirements
No matter what type of cryptocurrency company you are running, you must collect information on your customers and report it to the government if requested.
There is a €100,000 fine for not following KYC and AML laws as a cryptocurrency business in France. There is also a severe punishment if a business is suspected of money laundering, which could include jail time.
3. Cryptocurrency Gains Are Taxed
Similar to many other countries around the world, any cryptocurrency gains are taxed at 30%. Cryptocurrency capital gains also constitute as income for businesses.
4. ICOs Are Legal
ICOs are 100% legal in France, however they must follow stringent rules and disclose operating practices to the French government prior to offering the ICO. Additionally, from a regulatory standpoint, ICOs are referred to/classified as STOs (Security Token Offerings) in French law.
5. Cryptocurrencies Are NOT Legal Tender
In France, cryptocurrencies are not considered legal tender, and businesses aren’t required to accept them. That being said, they can be used for transactions, and owning digital assets like NFTs is legal. As a result, many businesses in urban areas have begun to accept cryptocurrency as tender at their business.
6. Cryptocurrency Mining is Legal
Currently, crypto mining is legal in France, but the government is keeping a close watch on the environmental impact of mining. This means that while you can move to France to mine crypto, it is not advised as future restrictions could limit your mining capabilities.
What is France Missing in Their Crypto Laws?
As you read above, France has many positive regulations in the cryptocurrency space. That being said, some critics have found their laws lacking in what they don’t regulate.
Below are some of the common complaints regarding French crypto laws:
· No regulatory sandbox to encourage innovation
· Complicated regulations for businesses offering services to other EU countries
· DeFi exchanges and wallets do not fall under regulations and thus many operate illegally within the country.
· MiCa (EU-wide crypto regulations) are, in places, contradictory to French regulations.
Although acceptance of blockchain technology is growing in France, many worry that the shortcomings of the current regulations can prevent future growth.
Is France Headed in the Right Direction?
Even though some individuals are unhappy with France's current cryptocurrency laws, we believe that the country is headed in the right direction. Unlike other EU countries that are avoiding cryptocurrency or choosing not to regulate it, France seems to be putting its best foot forward.
Of course, in our opinion, cryptocurrency was meant to be decentralized, meaning we never look for regulatory adoption other than allowing it to be legally used as tender (which France hasn’t quite adopted yet). Therefore, while we are happy it is easier for cryptocurrency and blockchain companies to operate in France, we don’t think it is necessarily needed for a cryptocurrency company to be successful—though it does keep consumers safer.
But if you are reading this as an already established business that wants to add cryptocurrency or blockchain technology to your operations, then France might absolutely be the place to do it—though you will pay high taxes and might find your ability to operate across EU borders a bit stifled.
Either way, we don’t feel strongly one way or another about France’s cryptocurrency regulations. They might be good for you and your business but terrible for a DeFi business, so they need to be evaluated on an individual basis.
Where Are French Cryptocurrency Regulations Headed Next?
Because there are already so many positive cryptocurrency regulations in France, we are optimistic that more are on the way. Whether or not they will further cryptocurrency adoption in the EU we cannot say for sure. What we can say is that many banks within France are currently working to develop their own blockchain-based stablecoins to increase ease of payment.
We hope that regulations will eventually make cryptocurrency legal tender within France so that citizens and visitors can use their Bitcoin or Ethereum to pay for their groceries, but of course, we aren’t going to hold our breath.
With rising crime in France, we think the adaptation of digital payments (as opposed to cash) is a move in the right direction, though we hope that decentralized blockchain projects will continue to flourish so users will always have the option of centralized versus decentralized.
Overall, we hope this article helped you to gain better insight to the cryptocurrency regulations within France and whether or not it might be an option for your business to expand into the EU in the future.
