As France prepares for presidential elections on April 24 in a second round, political pundits around the world place their bets. The choice is between the centrist incumbent Emmanuel Macron and the right-wing populist Marine Le Pen. Much of the political debate this time revolves around the economy, but there is one indispensable part that is largely absent from the candidates’ electoral agendas: digital assets. While both have a record of making public statements on cryptocurrency-related matters, it seems likely that neither Macron nor Le Pen will bring about any significant policy changes regarding the French digital economy.
Despite the notable efforts of the current administration to embrace the IT industry, France is still not, in many ways, a particularly tech-friendly country. For years, its authorities have been fighting at the forefront of the European regulatory cause against the tax “optimization” practices of US tech giants, such as opening European offices in more relaxed jurisdictions such as Ireland and Luxembourg.
Regarding regulation, the country does not have a specific regime for cryptocurrencies, but the general regulatory climate is quite harsh. The main legislation that regulates the industry is the Action Plan for Business Growth and the Transformation of companies of 2019, or PACTE. It requires all cryptocurrency companies in France (legally defined as digital asset service providers) to register with the Financial Markets Authority (AMF) and to comply with anti-money laundering and anti-terrorist financing (AML/CFT) requirements. ) established by the Fifth Anti-Money Laundering Directive of the European Union.
Perhaps the biggest headache for the crypto industry is the strict Know Your Customer (KYC) policy, which does not set a transaction value threshold for invoking reporting rules. In other words, every crypto transaction worth €1 or more requires a full KYC procedure, including disclosure of the full names, addresses and contact details of the parties.
On the positive side, disciplined players in the industry have the opportunity to obtain a special license from the AMF, which allows them to apply for bank accounts in France. As Thibault Verbiest, a Paris-based partner at the Metalaw law firm, explained to Cointelegraph, French banks are reluctant to open bank accounts for crypto companies.
Meanwhile, France’s central bank is actively exploring a possible central bank digital currency (CBDC).
French regulatory activism
French officials play an active role in the international regulatory process. In February 2021, Robert Ophèle, president of the AMF, proposed to consolidate all power and responsibility for crypto regulation in the hands of the European Securities and Markets Authority. He also emphasized the crucial role of blockchain technology in the future of the European economy. The proposition was later repeated by the French government.
Four months later, in June 2021, Bank of France Governor François Villeroy de Galhau redoubled his call to create a pan-European crypto regulatory framework as soon as possible. Unlike Ophèle, de Galhau’s perspective on the matter sounded much less friendly.
Emphasizing the threat of crypto erosion of “monetary sovereignty”, he estimated that Europe had only a year or two to solve the problem. EU regulators responded with some major initiatives, such as stepping up work on the Crypto Asset Market regulatory framework and the current revision of the Funds Transfer Regulation with tighter scrutiny of people’s transactions.
However, the French government has gone out of its way to support the crypto industry on a national level. “France has been at the forefront of crypto innovation, at least in terms of the adoption of the regulatory framework and some partnerships with the main players in the industry and the support through the financing of new projects,” Verbiest observed.
In November 2021, alongside Cédric O, the French secretary of state for the digital economy, Binance CEO Changpeng “CZ” Zhao announced a partnership with local fintech association France FinTech, pledging to spend $115 million in the development of European cryptography. industry.
Balancing Cautious Versus Disinterested Suspicion
According to a recent study, 4% of French adults consider cryptocurrencies as an issue that will determine their vote in the presidential elections. This modest number is reflected in the amount of attention both candidates have paid to cryptocurrencies.
Macron, a former banker, has taken a cautious stance by largely repeating calls for more regulation. At the Davos International Forum in 2018, he called Bitcoin (BTC) and digital currencies “the most aggressive players in the financial markets […] that can create financial crises and deregulate systems”, along with shadow banking.
As Verbiest recalled, Macron was trained to be a high-ranking official in France’s treasury department. It is therefore only natural that he would prioritize the anxieties of the European banking sector over the interests of the digital economy:
“Cryptocurrencies disrupt banking, and France has a very powerful banking sector. In addition, the European Union and the euro require that France reach a consensus with the other European member states on monetary and financial issues.
However, Macron’s first term brought into the halls of power at least two notable people who openly support the crypto industry. Back in 2019, OR fiance Support from “all crypto and blockchain players” sets “comprehensive and credible conditions” for growth. Several years later, however, O justified the tightening of AML/CFT and dismissed crypto businessmen’s reservations about the policy, saying he did not believe France was “missing the bandwagon on blockchain technology.”
Pierre Person, a 33-year-old member of the French parliament, was one of the co-founders of the youth organization Les Jeunes avec Macron, as well as the “left liberal” think tank in support of Macron’s policies. The Free Gauche. In 2019, he submitted a business-friendly report on blockchain to French lawmakers and has been advocating for the creation of the European stablecoin ever since.
More recently, however, Person resigned from the leadership position in Macron’s La République En Marche movement and shared his disenchantment with the government’s actions on cryptocurrencies.
Macron’s challenger, Le Pen, the leader of the family-owned nationalist National Rally party, has always preferred to talk about immigration threats rather than the digital economy. However, he has his own history of u-turning towards cryptocurrencies in public speeches.
In 2016, before the previous election, he called for a ban on Bitcoin, presenting it (and digital currencies in general) as an idea that originated from the “powerful Wall Street corporate lobby.” Since then, Le Pen has toned down the Wall Street narrative, limiting herself to supporting strict regulation of crypto assets. Unlike Macron’s entourage, she or her accomplices have yet to say a good word about cryptocurrencies or blockchain technology in general.
No to the self-regulatory sector, yes to the pan-European approach
Regardless of the outcome of Sunday’s vote, France is likely to stay in line with the pan-European regulatory process that the country itself has been contributing to for years. Speaking to Cointelegraph, Stephen Stonberg, CEO of crypto exchange Bittrex Global, commented:
“France is unlikely to have any major issues with the upcoming EU crypto asset markets. [MiCA] regulation, as French regulators will be aware that a pan-European approach will be necessary to properly supervise the industry. In fact, French regulators are more likely to be waiting for MiCA before making any major moves or commitments.”
If Macron prevails, his administration is likely to stay on its current course: a mix of cautiously crypto-friendly rhetoric (with an emphasis on blockchains, not coins) and a strict but not prohibitive policy towards digital assets, in full compliance with the FATF and the EU. frames
A great summary of Macron’s ambiguous relationship with cryptocurrencies is his interview, given several days before the second round of elections. Responding to questions about digital assets and Web3, the incumbent managed to avoid uttering the word “crypto” once as he delivered familiar phrases about his country’s mission to become the leader in the digital economy and support innovations. Perhaps the most important words are:
“I don’t believe in a self-regulated financial sector. This would not be sustainable or democratic. It is up to the public authorities to define the right conditions to allow the sector to develop with confidence while fostering innovation.”
With Le Pen, there is always the possibility of a clearly anti-EU stance, but this is not good news for the cryptocurrency industry. The candidate, who mixes left and right sentiments in her populist cocktail, has given no sign that she may be particularly interested in the digital economy.