Answer ... French fintech companies are subject to various regulatory regimes, depending on their activities. Where a company provides a regulated service, it must comply with a specific set of rules, which are the same for disruptive startups and well-established financial institutions. Some fintech startups are not subject to any specific rules, as their activities do not fall within the scope of any regulatory regime (eg, business-to-business technology providers developing white-label products).

The main regulatory regimes that govern the activities of fintech companies in France are as follows:

• Payment service providers are subject to the regulations on payment services (which transpose the EU Second Payment Services Directive (2015/2366).
• Neobanks and non-bank credit providers are subject to the regulations on credit and banking activities, as well as on payment services.
• Insurtech startups are governed by the regulations on insurance, which derive from the Solvency II and Insurance Distribution Directives, and their transposition into French law.
• Crowdfunding and crowdlending platforms are governed by a specific regulatory regime created in 2014.
• Fintech startups that provide investment services are subject to the regulations on investment services, which mostly derive from the Second Markets in Financial Instruments Directive.
• Startups whose activity involves digital assets are governed by a brand-new legal framework created by the PACTE Act of 22 May 2019.

Answer ... While most players in the fintech space are subject to the same regulatory regimes as traditional financial institutions, some legal frameworks were specifically created to govern emerging fintech activities. The best examples are the regulations applicable to crowdfunding and crowdlending (2014), and the regulations on digital asset service providers (DASPs) and initial coin offering issuers (2019).

Answer ... Fintech startups and traditional financial institutions are subject to the supervision of the Financial Markets Authority (AMF) or the Prudential Supervision and Resolution Authority (ACPR). Some large financial institutions are supervised by both.

The AMF’s focus is the proper functioning of financial markets and the protection of investors: therefore, it mainly supervises investment service providers, asset managers, crowdfunding platforms and DASPs. The ACPR’s primary purpose is to preserve the stability of the financial system through the supervision of the banking, payments and insurance sectors.

The AMF and the ACPR have similar powers. They elaborate the lowest level of regulation (ie, the technical regulations implementing the general provisions of French laws or European directives), which are then validated by the government. For example, the General Regulation of the AMF governs the activities of entities supervised by the AMF. The AMF and the ACPR also publish and update binding or non-binding guidelines and recommendations. In addition, both authorities grant authorisations to regulated entities and monitor these entities on an ongoing basis. Finally, both the AMF and the ACPR include independent bodies tasked with enforcing the regulations. These bodies may impose fines and disciplinary penalties pursuant to quasi-judicial proceedings.

Answer ... Over the last few years, both the AMF and the ACPR have adopted an open attitude towards fintech – although the AMF is more vocal. This approach is supported by the French government, which launched the ‘La French Tech’ brand in 2013 to promote French startups abroad.

Both authorities created fintech hubs – that is, internal teams dedicated to emerging business models and technologies. These teams advise fintech startups and help them to identify the proper regulatory regime for their activities. They are also directly involved in the elaboration of innovative legal frameworks. For example, the AMF’s fintech team played a key role in the drafting of the regulations on DASPs – notably through consultation with players in the crypto-assets industry. In addition, the AMF and the ACPR created the Fintech Forum, a consultation and dialogue body between regulatory agencies and the fintech sector.

A recent notable fintech-related initiative is the announcement by the French Central Bank in December 2019 that a wholesale central bank digital currency will be developed and tested in 2020.

Answer ... The most prominent fintech-related organisation is France Fintech, which was created in 2015 and represents more than 160 startups. The crowdfunding and crowdlending sector is also represented by Financement Participatif France. The emerging digital assets industry is championed by the Association pour le Développement des Actifs Numériques, founded in January 2020.