French Financial Regulator Responds to EU’s Crypto Consultation

As the European Commission finished its crypto consultation in March, France’s major financial regulator expressed its stance on the matter.

As the European Commission finished its public consultation on cryptocurrency assets in March, France’s major financial regulator stepped in to express its stance on the matter.

The Autorité des Marchés Financiers (AMF), the stock market regulator in France, has published an official response to the EC consultation, outlining some basic proposals regarding their own vision for crypto assets within the EC’s approach.

It’s too early to establish a classification of crypto assets

In an April 7 statement, the AMF argued that the classification of crypto assets should be based on the existing categories in order to differentiate between crypto assets that qualify as financial instruments and those that do not.

According to a report by Finance Magnates, the AMF also noted that it is still too early to establish a precise classification of crypto assets. The regulator reportedly defines any crypto asset as a “digital asset that may depend on cryptography and exists on a distributed ledger.”

A spokesperson at the AMF confirmed to Cointelegraph that the authority believes that it is not the right time to give a strict classification to crypto assets at the moment, stating:

“The AMF considers that giving a precise classification applied to crypto-assets could be premature at this stage. It is only after solid feedback that we will be able to judge the relevance of a precise classification (e.g. “utility tokens”, security tokens”, “payment tokens”, “stablecoins” etc.)”

At the same time, the representative also pointed out the importance of defining crypto assets in a broad sense at EU level, in order to provide a “level playing field between entities regulated at national level and those who are not subject to any regulation in their home country.”

AMF raises concerns over global stablecoins

Alongside remarks regarding the classification of crypto assets, the French regulator also proposed to adopt specific provisions for stablecoins — a type of cryptocurrency that is designed to maintain a stable market price through a peg to another asset or basket of assets.

Echoing France’s opposition to Facebook’s proposed Libra digital currency, the AMF outlined its concerns over the impact of the stablecoin on the economy. The regulator wrote:

“This proposal would allow a regulatory framework to apply to any stablecoin regardless of its size [...] However, this requires the ability to draw a line between stablecoins which would be concerned by mandatory requirements and other payment tokens only partially covered by mandatory requirements.”

Additionally, the AMF expressed its supportive stance toward the creation of an interbank settlement asset in central bank money to facilitate delivery-versus-payments processes on-chain. In the official notice, the regulator also proposed to create a digital lab at the European level to test security token-related projects in order to overcome the regulatory obstacles.

France is testing its central bank digital currency

The EC launched its public consultation for establishing a European framework for markets in crypto assets on Dec. 19, 2019. Open until March 19, 2020, the consultation aims to provide clarity to the classification of crypto assets as well as outline potential uses of crypto and blockchain technology in order to promote digital finance in Europe.

French authorities have been paying close attention to crypto and blockchain-based developments so far. On March 30, France’s central bank officially launched a program to test the integration of a central bank digital currency for interbank settlements. Earlier in March, the AMF announced that it was considering a regulatory sandbox meant to study the impact of security tokens in the European Union.