24 April 2024

Readiness For MiCA: Local Consistency With European Rules Is A Key Success Factor

With the MiCA regulation coming into force at the end of this year, it is key that local regulations adapt at an accelerated pace to facilitate the creation...
France Technology
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With the MiCA regulation coming into force at the end of this year, it is key that local regulations adapt at an accelerated pace to facilitate the creation of a harmonized regulatory framework for crypto-assets.

How is France preparing?

I had the chance to participate these past months, together with other fellow lawyers as well as academics and other qualified individuals, to contribute to the report published at the end of March by the Legal High Committee for Financial Markets of Paris (HCJP), related to the Markets in Crypto-Assets Regulation (MiCa) European regulation (UE) 2023/1114.

Working with many clients active in the crypto-assets sector, including on PSAN registrations and approvals, I can appreciate the challenges that they currently face from a regulatory perspective. From provision of cross-border services, "upgrade" of the local authorizations into MiCA licenses to advertisement, marketing and qualification of crypto-assets and related services, there are numbers of challenges that crypto-assets market players will face while MiCA enters into force. A timely adaptation of the French law in regards to MiCA would highly facilitate the activities of French and foreign companies operating in this sector in France.

The conclusions and recommendations of the report are of key importance to prepare France for MiCA. The report stresses the need to adapt French law to the new European rules, in particular by clarifying the property regime for crypto-assets and that for public offerings of tokens.

What changes have been suggested?

  • Changes are needed to facilitate the transfer of ownership of crypto-assets – the report suggests, with adaptations for intermediated crypto-assets, changes are needed to create an ad hoc system for pledging crypto-assets.

Such developments could lead to the deletion of several provisions of the PACTE law relating to the status of digital asset service providers (DASPs) and public token offerings.

  • The report also highlights the changes to be taken into account for already registered / licensed DASPs to comply with MiCA once in force; for instance, DASPs (which will become "CASPs" further to MiCA entry into force) will be under an express obligation to safe-keep clients' ownership rights on crypto-assets and funds.

Ultimately, the key issues covered by the HCJP rthe transitional period before MiCA fully enters into force; the proposition to create a civil law regime relating to crypto-asset transactions and to adapt guarantees to the specifics of crypto-assets by introducing a pledge for crypto-assets, as well as requests for clarification for public offerings of tokens.

It will be interesting to see how this progresses.

For more context

The MiCA regulation, adopted on May 31, 2023 by the European Union Commission, aims to establish a harmonized regulatory framework specific for crypto-assets in Europe and will therefore have a significant impact on the businesses active in the crypto-assets sector. It will come into force on December 30, 2024, with a transitional period until July 1, 2026.

Created at the joint initiative of the French Financial Markets Authority (AMF) and of the French Central Bank, the HCJP conducts and publishes independent legal analysis.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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