Is the French cryptocurrency sector at risk? With the change proposed by Senator Hervé Maurey, French companies will soon be forced to have PSAN approval, which could have dramatic consequences for all companies. We take stock of the situation.
Companies in the crosshairs of an elected representative
Since the fall of FTX last November, representatives of French political life debate on the next regulation to be brought to the cryptocurrency sector. Some elected officials want to introduce strict legislation for companies in the French ecosystem.
Hervé Maurey, senator for Eure, recently proposed an amendment to a legislative text for the monetary and financial code. In other words, the senator is trying to change the rules of the PACTE Actenacted in 2019 regulating the digital asset service providers (DASPs) industry.
As a reminder, PSAN is a regulatory status issued by the Autorité des marchés financiers (AMF) to regulate companies in the crypto sector in France so that they can carry out their activities in the territory. This device is divided into two categories:
- registrations, mandatory to start an activity;
- and approvals, optional.
👉 To understand everything about the PSAN registration and its application areas
If registration is easier to achieve, it is because the documents requested for its award are not based on the company’s characteristics, but rather on the skills of individuals to perform their activity in all circumstances. However, there are provisions for combating money laundering and the financing of terrorism (LCB-FT) in particular, as specified on the AMF’s website regarding the PSAN registration:
After submitting your file, one or more meetings/conference calls regarding the presentation of your project and your LCB-FT system will be arranged by AMF and ACPR.
On the contrary, approval is based on the company’s financial information. As a result, it is more complicated to achieve, as it requires both more in-depth analysis by AMF and more complex procedures for the company, especially insurance to cover its funds.
While around sixty French and foreign companies have a PSAN registration, the senator’s argument is that none of them have the optional approval. According to Hervé Maurey, registration is too lax to regulate the sector. He therefore requests that it be deleted in order to replace it with the endorsement:
“This change should make it possible to close the registration procedure and impose approval in order to avoid abuse of the legislative framework. »
At the time of writing, the amendment has been adopted by the Senate. This therefore means that all French companies must obtain approval before 1 October 2023. Otherwise, these companies will have to cease their activity.
👉 In France, what is the impact of the fall of FTX on the PSANs?
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An amendment being debated
In the days that follow, many voices are likely to rise over the election of a senator. While French companies bear the full brunt of FTX’s fall, this change could significantly slow down the development of the French cryptocurrency sector.
First of all, it is important to remember that accreditation is optional, but it companies have already been asking for it for months. Anyway, there are real obstacles to achieving itand even on the side of the AMF, which does not yet seem structured and ready to properly issue this approval.
One of the pain points of PSAN accreditation is the mandatory need to have professional liability insurance to secure the company’s funds. While companies in the sector find it difficult to be offered traditional banking services, insurance services categorically shun the sector.
Finally, this amendment is being discussed because companies in the French cryptocurrency sector are up against the wall, face centralized financial entities that refuse to provide them with services which are now required of them to comply with the applicable laws.
👉 To understand: Re-read the forum for Faustine Fleuret, president of ADAN
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French actors in danger?
If this approval becomes mandatory, companies in the cryptocurrency industry will have until October 1, 2023 to comply. But under the present conditions it is impossible to get it. As ADAN claims, the necessary staff and resources should first be put in place at the supervisory authorities.
As for the risks, they are always the same: by regulating French companies too strictly, they will lack competitiveness and attractiveness vis-à-vis foreign entities that escape French law. Although this law is the result of the collapse of FTX, it is the most regulated entities that will pay the high price:
“FTX’s recent bankruptcy has highlighted the risks associated with any investment in cryptoassets, especially when the company operates outside of any regulation.”
The amendment proposed by the Senator was voted on and accepted by the Senate. It will then be sent to the National Assembly, which will vote on it again to validate it. Waiting, companies must make their voices heard by the various elected representatives.
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