New laws on blockchain, ICOs and cryptocurrencies in France
Following Malta and Liechtenstein, France has become the next country to introduce laws on business activity relating to blockchain, ICOs and cryptocurrencies.
A bill known as PACTE (Plan d’Action pour la Croissance et la Transformation des Entreprises) was debated by the French parliament in September 2018.
The bill is a package of measures aimed at facilitating business activity. Art. 26 of the bill, which regulates cryptocurrencies and ICOs, amends book V “Service Provider”, title V “Provision of Banking Services” of the French Financial Code (le code monétaire et financier). Title V has been renamed “Acting as an Intermediary in Acquisition of Rights to Various Commodities and Issue of Tokens” (Intermédiaires en biens divers et émetteurs de jetons).
Definition of a token
The proposal for book V, title V, chapter II of the Financial Code, entitled “Issuers of Tokens”, provides a definition of a token. A token is defined as a non-material commodity which, in digital form, represents rights that may be issued, registered, stored, or transferred using a dispersed electronic registration mechanism enabling identification, directly or indirectly, of the owner of the commodity.
Definition of an ICO
This chapter defines an ICO as an offer of any kind to acquire tokens, submitted publicly, regardless of the form of the offer. Under the bill, purchasers are notified by the token issuer of the outcome of the ICO and that a secondary market has been established.
Under the proposal for the new provisions, ICO white papers should contain a set of specific information according to the guidelines provided in the provisions. The description of the project and of the rights carried by the token should be exhaustive and sufficiently clear to enable identification of the risk connected with the offer.
White papers can be submitted to the French financial markets regulator (Autorité des Marchés Financiers – AMF) for an ICO permit to be granted. A permit of this kind can only be granted to entities with their place of business in and registered in France.
Benefits of a permit
In addition, the new law gives entities that have been granted AMF permits for an ICO the right to open a bank account. The amendment made by members of parliament states that credit institutions specify objective, proportionate, and non-discriminatory rules for access to banking services for a savings account and current account for token issuers who have been granted an AMF permit. This access should assure these entities effective and unimpaired use of the services. This amendment addresses a request made by the community of those token issuers who have been denied access to services by banks as a precaution.
France a technological hub?
France is not known as paradise for businesses, especially blockchain start-ups. Like the “La French Tech” initiative intended to provide support for innovators and people launching start-ups, the PACTE proposal shows that the French government intends to change this.
Time will tell whether the initiatives described above will have the effects the French government desires, and whether France will become a technological hub.
Agnieszka Kraińska, legal adviser, EU law practice, Wardyński & Partners
Harald Marschner, attorney-at-law, Rechtsanwalt, Dispute Resolution and Arbitration practice, Wardyński & Partners