The National Assembly will therefore have voted in favor of strengthening the prerequisites for companies in the crypto sector that would like to benefit from PSAN registration in France. We interviewed Faustine Fleuret, the president of Adan, to better understand the challenges of this law and what it implies for the development of cryptocurrencies in France.
The National Assembly supports the strengthening of the PSAN registration
Yesterday, Tuesday, February 28, the National Assembly has agreed to vote in favor of a tightening of the rules allowing to allocate to a crypto company the precious Digital Asset Service Provider (DSP) status to operate on national soil.
The law, voted 109 to 71, will require companies wishing to register with the Autorité des marchés financiers (AMF) to show more transparency with regard to certain criteriain particular by presenting an internal conflict management policy, an ability to defend oneself in the event of a cyberattack or by ensuring that communication is not misleading and clear.
The said law must still pass through the hands of the President of the Republic Emmanuel Macron before being validated within a maximum period of 15 days. In the event that the latter is not approved by the Head of State, it will be returned to the National Assembly.
Moreover, beyond the change of pure legislative framework, it should also be noted that this reinforcement would apply from the month of July (and would therefore concern any new company wishing to benefit from the PSAN registration) if it were to receive its final approval, instead of the start of the year 2024 initially mentioned.
Nevertheless, companies already benefiting from registration as a PSAN with the AMF (about sixty) will not observe any change concerning them and will continue to benefit from the transition period relating to the MiCA regulationthe entry into force of which is envisaged for 2026.
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A happy medium that is hard to find
The Legislative Assembly struggles to agree on an appropriate framework for the crypto ecosystem, although it has already shown itself capable of letting it breathe from time to time. Let us recall in this respect that the centrist senator Hervé Maurey had tried to introduce an amendment aimed at making PSAN certification compulsory for unregistered service providers, with entry into force scheduled for October 2023.
A proposal that was fortunately quickly discarded thanks to the efforts of the Association for Digital Development (Adan) and other players in the ecosystem, who joined forces to demonstrate how catastrophic such a measure would be – not to mention not to say fatal – for the crypto community in France.
It was following these dialogues that the PSAN reinforcement ended up being reinforced, although its entry into force was not initially envisaged for the month of July.
In order to better understand what is at stake in this law and assess its impact on the development of companies in the crypto sector in France, we interviewed Faustine Fleuret, the president of Adan, in order to ask her a few questions.
Let’s start with the positive: companies wishing to register as a PSAN will therefore not have to bother with the mandatory approval, although said registration is considerably reinforced. How do you welcome this news?
Faustine Fleuret : Indeed, strengthening the registration of new PSANs is proving to be a more favorable alternative to the profession, in comparison with the acceleration of compulsory certification in France which was considered for a time. Aside from the rules relating to cybersecurity, the requirements that make registration more cumbersome are pragmatic and achievable in an accelerated schedule, including for young structures. In particular, the obligation to obtain professional liability insurance – almost non-existent products today – has been waived, this still leaving time to resolve this pitfall by the entry into force of MiCA in 2024.
These additional requirements also come directly from MiCA, which will advance the players in their compliance with European regulations. Finally, the impact of reinforced registration will be more limited (but nevertheless real) than that of compulsory authorization on the workload of the authorities (therefore the deadlines for examining files), regulatory uncertainty (therefore the roadmap of the PSANs that must register) and the attractiveness of France for foreign players seeking to establish themselves in the EU.
Regarding the strengthening of registration conditions for future PSANs, will this be detrimental to them?
FF : Even if the worst-case scenario for the sector has been avoided, the solution voted yesterday in the National Assembly presents two major pitfalls. On the one hand, the schedule for implementing enhanced registration was rushed at the end of the Joint Joint Committee and will concern all the PSANs filing a file from July 1, 2023, or whose file will not have not processed in time. On the other hand, the addition of cybersecurity requirements will be detrimental in particular to new entrants, whereas compliance with this component requires a considerable investment (several hundred thousand euros) and many clarifications are expected of the actors.
The Minister Delegate in charge of the Digital Transition Jean-Noël Barrot recently declared at the microphone of BFM Crypto that this reinforcement “ does not call into question, in my view, the vigor, the vitality of the ecosystem and the attractiveness of the French framework for preparing for the application of the European MiCa regulations “. Do you also agree, is this reinforcement a good way to prepare for the arrival of MiCA?
FF : Inspired by the common base of rules that all PSANs will have to respect under the MiCA era, rather than our Franco-French approval (close, but not perfectly equivalent to MiCA), the reinforced regime will bring the next PSANs registered at the gates of MiCA. During trialogues in 2022, Adan had pushed for the implementation of simplified procedures so that market players already complying with the constituent requirements of MiCA under French law do not have to renew the exercise with the authorities. who would have to re-verify compliance with these provisions, doubling the time and costs allocated by companies for their compliance. Thus, we can agree with the Minister and hope that a certain number of PSANs – those which will be newly registered, but also the service providers who have succeeded in gaining approval – will be in working order in time for the harmonization European regulations.
Nevertheless, the evolution of French legislation could jeopardize the emergence of future PSANs and the establishment of foreign players in France if all the peripheral conditions are not met.
On the one hand, to be effective, any regulation whatsoever must be adapted to the specificities of the activities it regulates, and proportionate according to the profile of the players targeted (their size, their maturity, their resources) and the risks they carry. I therefore reiterate here the previously mentioned concerns raised by the addition of the cybersecurity component.
On the other hand, to be credible and protective of the companies which respect it against the unfair competition of those which dispense with it, a regulation must have the means of its ambitions. Thus, both to authorize players within a reasonable timeframe and to monitor everyone’s compliance with the rules (and sanction if necessary), the authorities will have to considerably increase their resources and expertise. At constant headcount, the bottleneck of the PSANs already waiting to be registered for months will only worsen, and the players in default of compliance with our rules will continue to address the French and European public without being prevented. In an essentially cross-border world, regulations cannot do without efficient supervision and international harmonization.
These risks are materializing today in two ways: the new local players are planning to develop in our neighbours, and the large foreign companies that considered France to establish their base camp in Europe are now hesitating. Until we understand that the emergence of web 3 champions must be propelled by two inseparable drivers, regulation and competitiveness, we will miss the objectives aimed at by these rules – such as user protection – and we abuse the future of our digital sovereignty.
In order to complete this article and if you wish to obtain more information about Adan’s vision of the near future of our French crypto ecosystem, we strongly invite you to read Adan’s balance sheet published on March 1st.
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