France to Implement Crypto Regulations by 2024
Greetings! I am Qadir A.K, a passionate follower of cryptocurrencies and a research columnist. Today, we will explore the topic of cryptocurrency regulations in France in my writing series, ‘The Cryptocurrency Breakthrough 2020 – Synopsis 14’.
France, known as a modern country and a leader among European nations, has recognized the significance of blockchain technology and cryptocurrencies. The government has formulated a plan to foster new innovations in this field.
When it comes to cryptocurrencies, France has a positive attitude and has implemented necessary regulations through its regulatory bodies. These bodies include the Authority des Marches Financiers (AMF), the French Prudential Supervision and Resolution Authority (ACPR), and the Agence Nationale de la Securite des Systemes information (ANSSI), which is responsible for cybersecurity.
France has witnessed the launch of major projects utilizing blockchain technology, setting the stage for the future of French cryptocurrencies. For instance, Tezos, a blockchain network connected to a digital token called tez or tezzie, has been used by the French army to authenticate its judicial expenses.
Initially, the AMF had a skeptical stance towards cryptocurrencies and even blacklisted certain crypto websites. However, it has now changed its position and is supportive of digital assets and ICOs. French Minister Bruno Le Maire has stated that the government fully supports the blockchain and crypto sectors, emphasizing that France will not miss out on the blockchain revolution.
The AMF has released new regulations, known as the PACTE law, for digital asset service providers. These regulations align with the EU 5AMLD and require providers to offer specific services such as digital asset custody, buying or exchanging digital assets for fiat currency, trading digital assets, managing digital asset portfolios, and providing advice to investors interested in digital assets.
To register with the AMF, service providers offering custody services and facilitating buying or selling of digital assets for fiat currency need to meet certain requirements. These include having a cybersecurity program, a two-year business plan, a list of digital assets, an internal control system plan, an insurance claims procedure, an IT system plan, a plan to prevent money laundering and terror funding, a physical location, and at least one senior manager. Additionally, service providers must submit indemnity insurance or reserve funds as part of the registration process. Technical audits are conducted to ensure cybersecurity measures are in place.
France has become one of the first countries to authorize the registration and transfer of cryptocurrencies, and it has recently adopted a new legal framework called the Business Growth and Transformation Law (PACTE law). This law governs digital assets, digital asset service providers or exchanges, and ICOs, with the aim of positioning France at the forefront of blockchain technology.
In terms of taxation, France imposes taxes on gains from cryptocurrencies in two scenarios. Firstly, when gains are earned through trading and mining, progressive income tax, along with additional social contributions, is charged at approximately 45%. Secondly, companies dealing with cryptocurrencies are subject to a corporate gains tax of 33.3%, which will gradually reduce to 25% by 2022.
Cryptocurrency mining is permitted in France and is not heavily regulated. However, the profits generated from mining are taxed under the progressive income tax, at a rate of approximately 45%.
Now, let’s take a look at some notable events in France related to cryptocurrency regulations:
– On April 10, 2020, the Bank of France announced its experiment program on the Central bank digital currency.
– On January 22, 2020, French regulators published new rules for crypto firms, effective from January 1, 2020, primarily focusing on licensing direct asset service providers (DASP’s).
– On April 11, 2019, the French National Assembly adopted a plan called the Plan d’Action pour la Croissance et la Transformation des Entreprises (PACTE- Action Plan for Business Growth and Transformation), which established a framework for cryptocurrency-based fundraising and digital asset service providers.
– On November 14, 2018, the French government set taxes on gains from cryptocurrency at 30%, with corporate holdings taxed when cryptocurrencies are converted to euros.
– On March 19, 2018, the French Finance Minister Bruno Le Maire announced plans to create a legal framework for ICOs, with the proposal granting authorization to companies to issue coins or tokens in ICOs or token sales, subject to meeting investor protection criteria.
– On December 5, 2013, the French Central Bank issued a warning about the risks associated with virtual currencies, including security risks, absence of central regulatory authority, speculation and volatility, legal risks, and use of currencies for illegal activities.
In conclusion, France is embracing cryptocurrencies and considering them as legal currencies. The regulations surrounding cryptocurrencies and exchanges are encouraging, and the government is actively supporting new innovations through blockchain technology. The future looks promising for cryptocurrencies and their integration into the French economy.