France and cryptocurrency: from laggard to vanguard

As part of our series on cryptocurrency regulation and usage, we turn our attention to France – a country usually associated with high levels of regulation.

France has recently overhauled its attitude to crypto to become more crypto-friendly while introducing innovative legislation – writes Alex Moss, Business Development Executive, W2.

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.

Having successfully introduced these new rules, France is pushing other European Union countries to adopt similar legislation, making these new regulations doubly significant. The new regulations take crypto services in France out of a legal grey area – from now on, they will be subject to many of the same AML/KYC obligations and mandatory registration as fiat currencies.

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 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.

Payments processors, and those undertaking KYC requirements for merchants, are 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 in France, 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 get in touch with W2