France, officially the French Republic, had territories on several continents. As a developed nation, it played a leading role in industrial production. Economically, France ranked second in the European Union after Germany and sixth in the world. The government showed support for cryptocurrency by reducing taxes on virtual currencies, aiming to create legal regulations to protect investors and boost the national economy. Much of France’s participation in the cryptocurrency market relied on the president’s policies.
As one of the world’s modern countries, France projected itself as a leader among European nations. Recognizing the importance of blockchain technology and cryptocurrencies, France laid out a work plan to develop new innovations.
Cryptocurrencies have a positive approach in France with necessary regulations on them. They are examined by the regulatory bodies of France, Authority des Marches Financiers (AMF), French Prudential Supervision and Resolution Authority (ACPR), and Agence Nationale de la Securite des Systemes information (ANSSI)- the cybersecurity agency of France.
France had become the central European hub for crypto and blockchain companies, with several French start-ups expanding internationally. These start-ups developed various business models, including:
This surge of activity was largely due to the adoption in 2019 of the PACTE Act, short for “Action Plan for the Growth and Transformation of Companies.” This legislation introduced the first comprehensive regulatory framework in France for initial coin offerings (ICOs) and intermediaries dealing with cryptocurrencies, known as digital asset service providers (DASPs). As a result, by the time of writing, 96 companies had registered as DASPs, and one had been licensed under this statute.
The French minister Bruno Le Maire stated that the government is in full support of the blockchain and crypto sectors.
“France will not miss the Blockchain revolution,” he added.
France’s ambition to establish itself as a prominent crypto hub in Europe was clear when it adopted the PACTE Act on May 22, 2019. This legislation introduced a regulatory framework for Digital Asset Service Providers (DASPs) and Initial Coin Offerings (ICOs). According to the PACTE Act, DASPs must register with the Autorité des Marchés Financiers (AMF) if they offer any of the following services:
Failure to register can lead to penalties including imprisonment for up to two years and fines up to EUR 30,000 under Articles L.54-10-2 and L.572-23 of the French Monetary and Financial Code (CMF).
Assets that resemble financial instruments or electronic money are categorized accordingly and are subject to specific regulatory frameworks outside the digital asset category.
In alignment with the EU’s Fifth Anti-Money Laundering Directive (5AMLD), the AMF has implemented additional regulations for DASPs under the PACTE Act. Service providers must offer one or more of the following services to be eligible for registration:
Registration with the AMF is mandatory for DASPs offering custody services and facilitating the purchase or sale of digital assets for fiat currency. To obtain registration, providers must submit comprehensive documentation including a cybersecurity program, a two-year business plan, a list of offered digital assets, an internal control system plan, insurance claims procedures, an IT system plan, anti-money laundering and anti-terrorism funding prevention plans, information on their geographical location, and details of at least one senior manager. Additionally, providers are required to maintain indemnity insurance or reserve funds.
Once registered, DASPs undergo technical audits to ensure compliance with cybersecurity standards.
France, having become one of the pioneers in authorizing the registration and transfer of cryptocurrencies, has now implemented the Business Growth and Transformation Law (PACTE Law) to further its goal of leading in blockchain technology. This law governs digital assets, DASPs, exchanges, and ICOs, positioning France at the forefront of regulatory innovation in the digital asset space.
Taxation of Capital Gains
As of January 1, 2023, new regulations govern the taxation of capital gains from digital asset sales, contingent upon whether the seller is an individual or a professional.
Accounting Standards for Companies
Companies must adhere to specific accounting standards issued by the French Accounting Standards Authority (“ANC”) for handling digital assets.
Value Added Tax (VAT) Considerations
Transactions involving cryptocurrencies are treated differently based on the nature of the transaction.
Mining was authorized in France, with no specific regulations governing this activity. Despite this authorization, only a few companies engaged in cryptocurrency mining within the country. One example is Summit Mining, which offered services enabling investors to buy shares in mining operations and share in the assets produced through mining activities. These services provided an opportunity for individuals with limited computing capacity to participate collaboratively in mining ventures.
16-05-2024: The Autorité des Marchés Financiers warned investors that Bybit provided services illegally. Bybit was blacklisted in May 2022 for non-compliance with French regulations, and the warning was reiterated on May 16, reminding the public of its illegal operations.
02-02-2024: On February 2, France and Germany withdrew their objections to the AI Act, leading to the European Union’s approval of the final text. Thierry Breton, EU Commissioner for Internal Market, confirmed all 27 member states endorsed the political agreement reached in December 2023, calling it a historic milestone and a global precedent.
10-08-2023: France’s securities regulator updated regulations for digital asset service providers in preparation for the EU’s MiCA implementation by late 2024. Effective January 1, 2024, certain DASPs must meet enhanced registration criteria, as per the (Autorité des Marchés Financiers) AMF’s recent announcement.
10-04-2020:– The Bank of France announced its experiment program on the Central bank digital currency.
22-01-2020:- French regulators publish new rules for crypto firms effective from 01-01-2020. The new rules released are mainly to provide licence for direct asset service providers (DASP’s). Once licenced, DASP’d are required to go through audits to ensure that their system is secured.
11-04-2019:- The French National Assembly adopted a plan called, Plan d’Action pour la Croissance et la Transformation des Entreprises(PACTE- Action Plan for Business Growth and Transformation). This plan would establish a framework for cryptocurrency-based fundraising and for digital assets service providers.
According to this plan, a blockchain company is required to obtain a ‘visa’ or license with the country’s financial authorities. If the companies opt for not adopting the plan, then they are not entitled to solicitation, funding or any sponsorship activities.
14-11-2018:- The French government set taxes on the gains from cryptocurrency of 30%. The corporate holding will only be taxed when the cryptocurrencies converted to euros.
This announcement was done by french finance minister Burno Le Maire in a speech to the French Financial market regulator’s annual conference.
09-10-2018:- The bill was approved at its first reading in the National Assembly.
24-09-2018:- The French National Commission on Informatics and Liberty released guidance for applying general Data Protection Regulation (GDPR) to blockchain technologies.
18-06-2018:- PACTE bill was presented to the council of ministers.
04-05-2018:- The Minister of Economy and Finance, Burno Le Maire presents a series of measures to be included in PACTE.
26-04-2018:- The French Council of State has announced that it has changed the tax rates for the cryptocurrency sales from 45% to 19%. The reason was cryptocurrency was reclassified as movable property. The exceptions to this are the coins earned directly from mining operations, which will be taxed as income.
19-03-2018:- The French Finance minister Bruno Le Maire, reported that France plans to create a legal framework for ICO’s. The action plan would be proposed to the French Government in the month of April/May.
This proposal would give French Market Regulator authorities (AMF) the ability to grant authorization to companies to issue coins or tokens in ICO or token sales. It is mandatory that the companies meet the criteria set in virtue of investor protection.
05-02-2018:- Online public consultation ended with 63000 votes.
16-01-2018:- The French Finance Minister announced the creation of a working group to develop cryptocurrency regulations. The former deputy governor of France’s Central Bank, Jean-Pierre Landau, will head the group.
The goals of the working group were to establish more control over the development of new financial products related to cryptocurrencies. To prevent the use of cryptocurrencies in tax evasion, money laundering, funding of terrorism or other criminal activity was part of the work.
15-01-2018:- Launch of online public consultation.
08-12-2017:- France passes new rules for trading unlisted securities instantly. The new rules mean that banks and fintech companies can set up blockchain platforms for trading of unlisted securities avoiding the middleman like brokers and custodian banks.
23-10-2017:- Launch of first PACTE consultation phase.
23-07-2014:- The French Senate released a report focusing on the type of regulation the government has to apply on Bitcoin transactions. It called Bitcoin as a type of virtual bartering tool and called cryptocurrencies a ‘long term trend raising important legal and economic matters, that can no longer be disregarded by public authorities’.
11-07-2014:- In a report, the Finance Ministry has announced its plans to introduce customer identity verification for Bitcoin distributors and other platforms by the end of the year.
07-07-2014:- The France Police shut down a Bitcoin exchange operating illegally in France. It seized 388 Bitcoins. The site operators were examined on charges of illegal banking, money laundering and illegal gambling websites.
23-06-2014:- The Senate committee of France heard an affidavit on the issues pertaining to the development of Bitcoin and similar other virtual currencies. The committee came up with the conclusion that cryptocurrencies are a long term trend and public authorities cannot ignore them.
The committee also accepted the risks involved in Bitcoin but at the same time said it would offer multiple opportunities in future. And hence public authorities need to work on the regulatory framework.
25-04-2014:- The French Ministry of Economy and Finance said that revenues generated from digital currency are taxable. No matter that cryptocurrency is still not recognised by the state. It also said that it required a declaration from the bank with the French Anti-Money laundering agency, if the sale of virtual currency is routed through a bank.
05-12-2013:- The French Central Bank issues a warning about risks associated with virtual currencies. The risks included
Cryptocurrencies enjoy the most legal status in France accepting them as currencies. The regulations on the cryptocurrencies and the exchanges are also encouraging. The government is also very progressive in implementation of new innovations using blockchain technology.
I hope a good future is welcomed by France for the cryptocurrencies and its business. The upcoming regulations would surely glorify the cryptos in France and also the economy would also be boosted with technology integration.
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