Governor of Bank of France Pushes for Mandatory Licensing for Crypto Firms and Stricter Regulations

During his speech to the financial sector in Paris on Thursday, January 5, Bank of France Governor Francois Villeroy de Galhau urged to tighten up the regulatory requirements for crypto firms.

Villeroy said that the recent volatility in the crypto space and major upheavals require a closer look into regulations. The Bank of France governor is of the view that France shouldn’t wait for the European rules to kick in. Thus he wants to make crypto licensing obligatory in the country for Digital Asset Service Providers, or DASPs.

So far, France has left a loose or lenient approach to crypto regulations in the country. Currently, no DASPs operating in the country have opted for crypto licensing. Rather, more than 60 firms including giants like Binance Holdings have opted for the lighter-touch “registration” from markets authority AMF.

In his speech on Thursday, Villeroy said “All the disorder in 2022 feeds a simple belief: it is desirable for France to move to an obligatory licensing of DASP as soon as possible, rather than just registration”.

In order to obtain a license, DASPs need to comply with certain requirements for organization, financial resources and business conduct, as per Autorité des Marchés Financiers (AMF). Unlike the normal registrations, a license requires companies to disclose more information relating to their financial health as well as their systems of control. Besides, it would also mean providing greater security to consumers.

France is currently facing the regulatory pressure to fill this loophole and move beyond its minimal regulatory oversight. Hervé Maurey, a member of the Senate’s influential finance commission, has also proposed a to eliminate a clause that allows crypto firms to operate in the country without a regulatory license until 2026.

Speaking to the Financial Times, Maurey said: “The FTX collapse was a detonation [that] contributed to a moment of reckoning and awareness,” Maurey told the Financial Times. “This led a number of players within the French system to consider that things needed to be supervised more tightly.”

“We have always been clear that registered players are very lightly regulated and we have called on investors to be highly vigilant,” said the AMF.

However, this would mean that France could be losing its crypto-friendly status going ahead. France’s crypto lobbying group Adan notes that the proposed amendments mean that the country was “renouncing its ambition” of becoming a crypto hub. The group also accused the country of “abandoning an industry of the future” because of FTX’s collapse.