France vs. The Passporting of Crypto Licenses
The European Union’s unified approach to crypto regulation, enshrined in the Markets in Crypto-Assets Regulation (MiCA), is facing its first major test. The French securities regulator, the Autorité des Marchés Financiers (AMF), is reportedly considering a move that could block cryptocurrency companies from operating in France using licenses obtained in other EU member states. This practice, known as “passporting,” is a cornerstone of MiCA, designed to allow firms licensed in one EU country to operate across the entire bloc.
MiCA‘s Promise: A Harmonized Market
MiCA aimed to create a level playing field, preventing regulatory arbitrage where companies seek out jurisdictions with more lenient rules. The AMF‘s reported warning stems from concerns that some crypto companies are indeed doing just that, securing licenses in countries perceived as more accommodating. This challenge throws a wrench in MiCA‘s goal of establishing a single, harmonized market for crypto-asset service providers within the EU.
Legal Hurdles and Divergent Views
While some legal experts argue that blocking passporting goes against the very spirit of MiCA, others believe it’s technically feasible, albeit with considerable legal complexity. Marina Markezic, executive director of the European Crypto Initiative (EUCI), highlighted that this development puts pressure on MiCA‘s promise of a unified market. Moreover, position papers have revealed “growing tensions over how MiCA should be enforced,” with national authorities seemingly holding diverging views on key supervisory matters.
The AMF‘s Stance and the Role of ESMA
France, alongside Austria and Italy, has called for the European Securities and Markets Authority (ESMA) to take over the supervision of major crypto companies. This move underscores the growing scrutiny of large crypto entities. According to Edwin Mata, lawyer and CEO of Brickken, the AMF’s action appears to be more of a “warning,” signaling intensified scrutiny. He clarifies that while the AMF cannot block a MiCA-licensed entity, it can monitor conduct and escalate concerns to ESMA. The regulator is focused on ensuring crypto firms do not exploit loopholes by structuring products under MiCA when they should fall under MiFID II, the EU’s existing framework for securities markets.
Potential Implications for the Crypto Industry
The AMF‘s potential move could have far-reaching implications. It could create uncertainty for crypto businesses operating within the EU and may necessitate legislative changes to MiCA itself, potentially re-opening political negotiations and creating instability for the industry. The situation highlights the challenges of enforcing a pan-European regulatory framework when national regulators have differing priorities and interpretations. The outcome of this dispute will set a precedent for how MiCA is applied and could determine the future of the EU’s ambitions to be a global leader in crypto regulation.
