France’s recent indication that it might obstruct cryptocurrency companies, which hold licenses from other European Union countries—commonly referred to as “passporting”—is stirring considerable discussion regarding the enforcement of the EU’s MiCA (Markets in Crypto-Assets Regulation). Reuters reported on Monday that the country’s financial regulator, the Autorité des Marchés Financiers (AMF), is contemplating a ban on cryptocurrencies operating under foreign licenses, driven by concerns over businesses seeking approval in jurisdictions with less stringent regulations.
This development unfolds just months after MiCA took effect, aimed at establishing a unified regulatory framework across EU member states for crypto asset service providers. Designed to mitigate regulatory arbitrage, which has become a key point of contention for the AMF, the regulation faces its first significant test in the form of France’s warning.
Marina Markezic, executive director of the European Crypto Initiative (EUCI), remarked, “MiCA was conceived to provide a single regulated market across Europe. However, the integrity of that promise is now facing challenges.” While some legal professionals argue that France’s position contradicts the principles of MiCA, others assert that establishing such a ban could be feasible, albeit laden with legal intricacies.
The tension surrounding MiCA’s application is becoming increasingly visible, with multiple national authorities expressing differing interpretations of crucial supervisory aspects. France is not alone in advocating for a shift in oversight; it joins Austria and Italy in calling for the Paris-based European Securities and Markets Authority (ESMA) to assume regulatory control over large crypto entities, as outlined in a position paper reviewed by Reuters.
Such proposals would require amendments to MiCA itself, potentially revisiting political negotiations and introducing further uncertainty into the crypto sector. Markezic pointed out that opening up discussions around possible legislative changes could complicate the existing regulatory landscape.
However, not all experts believe that blocking license portability is a viable option under MiCA. Edwin Mata, co-founder and CEO of asset tokenization platform Brickken, asserted, “The AMF lacks the legal authority to prevent a duly licensed entity under MiCA from conducting operations in France.” He elaborated that while the AMF retains the capability to monitor operations and raise compliance concerns, it cannot impose unilateral restrictions on companies licensed in other member states.
Mata emphasized that the nature of MiCA as a regulation, rather than a directive, mandates its direct and uniform applicability across all EU nations. The AMF’s statements, therefore, seem to act as a cautionary signal that France intends to closely assess whether firms are adequately aligning their products with MiCA or if they are improperly categorizing them under the lighter regulatory framework of MiFID II, the Markets in Financial Instruments Directive II.
The ongoing debate illustrates the complexities regulators face in ensuring that crypto firms do not exploit lenient regulatory frameworks for products that should be classified as securities. As MiCA implementation unfolds, the balance between fostering innovation in the crypto sector and ensuring appropriate regulatory oversight remains a critical point of focus for the EU.
