The French government has finally approved Pacte bill which facilitates the country’s financial regulatory body Autorité des marchés financiers to enforce new regulation in the crypto market. Pacte bill has was initially proposed on Oct. 23, 2017 and was presented before the council of ministers on June 18, 2018 post which it was consulted with various organizations and professional federations and has finally come to pass as new finance bill. According to the regulatory body AMF, the bill which has finally been approved in this year’s finance bill contains 70 articles relating to regulatory and non regulatory mechanisms and tax measures for crypto assets. The PACTE bill facilitates AMF to enforce optional and mandatory licensing on cryptocurrency service providers, ICO and also provides guidelines for investment funds on investing in crypto assets and market. When speaking of PACTE bill, AMF Chairman Robert Ophele has commented that
“These are common sense rules. This regime will enable us to address this new issue with a proportionate framework that both protects investors and fosters innovation. We believe it will attract good projects.”
According to regulatory authorities, while it is optional for a company dealing with cryptocurrency related financial assets to apply for license, it is mandatory for the company to register with AMF. AMF authorities stated that any transaction in crypto currency market, be it purchase or sale of digital assets involves use of legal tender and hence it is mandatory to be put under regulation. According to PACTE bill, as long as company dealing with any of the services mentioned below it is required to register with AMF and is to follow required guidelines mentioned in the bill. The cryptocurrency services which come under regulation are as follows:
- Crypto Custodial Services
- Crypto brokers and exchanges
- Any deals which contain or offer service facilitating purchase and sale of digital assets against legal tender
- Crypto Asset Management
- Underwriting and advisory dealing with Crypto currency related financial instruments.
When it comes to ICO, the guidelines in the bill states that ICO issuers must apply to approval from the AMF. AMF will look into details such as origin of issues – if the party involved in legally incorporated or registered in France, details of the project, information on token and companies which back the project. The ICO offering must also provide a system which to monitor and safeguard the assets collected during the ICO period while also ensuring that the project and assets involved comply with anti-money laundering and anti-terrorist financing measures for the offering to be approved by regulatory authority. While an ICO could try to raise funds from French market without registering with AMF, failing to register will prevent the involved party from soliciting the project in general market as AMF will regularly publish list of ICO’s which have been approved by the regulatory body.
When it comes to guidelines for funds that can invest in crypto currency market and crypto assets, the bill has stated the nature of funds which are permitted to invest in the crypto market. There are two types of funds.
- A professional specialised investment fund which complies with liquidity and valuation rules applicable to them.
- A professional private equity investment fund subject to a limit of 20% of their assets.
While neither funds are required to be authorised by AMF, they funds must be declared to the regulatory within one month of their creation. However, the key focus of PACTE bill for AMF is the provision which helps increase AMF’s regulatory Oversight on cryptocurrency market. Financial institutions which deal with crypto market related services mentioned above but fail to comply with guidelines specified in the bill will now be blacklisted by AMF. Further, AMF now has to power to block access to websites which offer crypto services in case the offering is deemed fraudulent by the regulatory body. According to a report published in the Reuters website, French finance Minister Bruno Le Maire was quoted stating that he wishes European member nations establish a single common regulatory framework inspired by cues from France’s PACTE bill as he believes it to be the right one.
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