France to Become a European Crypto Hub by 2024 with New Regulations
France, known officially as the French Republic, held territories across various continents. As a developed nation, it took a leading role in industrial production. Economically, France stood as the second-largest in the European Union after Germany and sixth globally. The government’s stance on cryptocurrency was positive, as it reduced taxes on virtual currencies to establish legal regulations safeguarding investors and enhancing the national economy. A significant portion of France’s involvement in the cryptocurrency market was influenced by the policies of the president.
Positioning itself as a modern nation on the global stage, France presented itself as a leader among European countries. Acknowledging the significance of blockchain technology and cryptocurrencies, France outlined a strategic plan to foster new advancements.
Government Support for Cryptocurrency
Cryptocurrencies were viewed favorably in France, with regulatory bodies such as the Authority des Marches Financiers (AMF), French Prudential Supervision and Resolution Authority (ACPR), and the cybersecurity agency of France – Agence Nationale de la Securite des Systemes information (ANSSI) overseeing them.
France emerged as a central hub for crypto and blockchain companies in Europe, with numerous French start-ups expanding internationally. These start-ups developed various business models, including exchange platforms for retail investors like Paymium, digital asset brokers such as Coinhouse, Meria, and Deskoin, and prime brokers offering over-the-counter services to institutional clients. Hardware wallet manufacturers like Ledger, data collection and analytics services like Kaiko, blockchain software development companies like Nomadic Labs and ARK.io, and decentralized finance platforms like Morpho, Angle, Paladin, ParaSwap, Mangrove, and Kleros also flourished in the French market.
The surge in cryptocurrency activities in France was largely due to the adoption of the PACTE Act in 2019, which provided a comprehensive regulatory framework for initial coin offerings (ICOs) and digital asset service providers (DASPs). This led to the registration of 96 companies as DASPs under this statute.
French Minister Bruno Le Maire expressed full support for the blockchain and crypto sectors, ensuring that France would not miss out on the blockchain revolution.
Regulatory Framework for Cryptocurrencies
France’s ambition to establish itself as a prominent crypto hub in Europe was evident with the adoption of the PACTE Act in 2019. This legislation introduced a regulatory framework for Digital Asset Service Providers (DASPs) and Initial Coin Offerings (ICOs). DASPs were required to register with the Autorité des Marchés Financiers (AMF) if they offered specific services related to digital assets.
In alignment with the EU’s Fifth Anti-Money Laundering Directive (5AMLD), the AMF implemented additional regulations for DASPs under the PACTE Act. Service providers offering custody services and facilitating the purchase or sale of digital assets for fiat currency were mandated to register with the AMF, following stringent criteria and audits to ensure compliance with cybersecurity standards.
France stood as one of the pioneers in regulating cryptocurrencies, implementing the Business Growth and Transformation Law (PACTE Law) to lead in blockchain technology. This legislation governed digital assets, DASPs, exchanges, and ICOs, showcasing France’s innovative regulatory approach in the digital asset space.
Taxation of Cryptocurrencies
New regulations governing the taxation of capital gains from digital asset sales were set to be effective from January 1, 2023. Individual investors would be subject to a flat tax rate of 30% on total capital gains, while professional investors and miners would face progressive tax scales. Companies were required to adhere to specific accounting standards for handling digital assets, with VAT considerations based on the nature of transactions involving cryptocurrencies.
France’s proactive approach towards regulating cryptocurrencies and fostering blockchain technology signaled a promising future for digital assets in the country. The government’s support for innovation and technological advancements in the crypto space was poised to boost the economy and solidify France’s position in the global market.