The governor of the French central bank, Francois Villeroy de Galhau, has called for stricter licensing criteria and requirements for crypto companies operating out of France. His comments come after taking into consideration the current turbulence in the crypto market.

During his speech on 5 January in Paris, the Bank of France governor stated that [France should not wait](/news/article/france-crypto-rules-under-pressure) for the upcoming crypto [laws in the EU](/news/article/eu-crypto-regulation-save-energy) to impose compulsory licensing for local digital asset service providers (DASPs).

The Markets in Crypto Assets Bill (MiCA) by the European Parliament lays out a crypto licensing order not expected to be put into force until 2024.

In a 5 January report from Bloomberg, the governor talks about the country's financial industry, stating that all the chaos in 2022 only points to one thing. That is, France should move to a compulsory licensing of DASPs instead of just a registration as soon as possible.

Presently, all crypto businesses that offer crypto custody and training must only register with the Financial Markets Authority (AMF), the country's market regulator.

## The French central bank governor urges for licensing after MiCA amendment proposed

The push for licensing comes after an amendment was proposed in December by Hervé Maurey, a member of the senate finance commission. The amendment called to eliminate a clause that allows companies to operate without a license.

Currently, the laws in France allow companies to operate without needing a license until 2026. This is to remain the same until MiCA passes a regime that does not allow companies to run unlicensed. 

Considerations regarding the amendment will begin in January in the parliament.

MiCA has been a work in progress for the EU parliament since September 2020. On 10 October, a European Parliament committee passed the [crypto framework](https://cointelegraph.com/news/european-parliament-committee-passes-mica-crypto-framework-in-landslide-vote) on Economic and Monetary Affairs as a result of deliberations between the European Commission, EU Council, and European Parliament.


yellow image of french central bank banque de france

French Central Bank Boss Urges Crypto Licensing

France is under pressure to fix a loophole in upcoming crypto legislation that would give an extended grace period to encourage digital asset businesses to set up shop in the nation with less regulatory monitoring.

Hervé Maurey, a member of the Senate's key finance committee, has offered an amendment to legislation that would remove a provision allowing registered crypto firms to operate in the country without a complete regulatory licence until 2026.

His action puts more pressure on the French Government and regulators over the country's crypto-friendly posture. More rigid EU standards will take effect in 2024, but France plans to keep its existing framework in place for another 18 months.

Critics' fears have grown this year as the values of popular tokens have plummeted, worsened by the collapse of  [Sam Bankman Fried's cryptocurrency enterprise, FTX,](/news/article/ftx-boss-denied-bail-in-bahamas) last month. On Tuesday, US authorities charged Bankman-Fried with crimes, including fraud.

## France crypto position

France has attempted to position itself as one of the most appealing nations for crypto businesses to set up their office, bringing companies such as exchange operator Binance to Paris.

The existing approach permits crypto firms to register in the country without obtaining a full licence, allowing them to operate with limited oversight.

## France crypto firms need to get a licence from regulator

Hervé Maurey’s plan would require corporations to get a licence from the French regulator, the [Autorité des Marchés Financiers (AMF)](https://www.amf-france.org/en), beginning in October next year. Licencing, as opposed to registration, protects consumers and forces corporations to reveal more information about their financial health and control mechanisms. There are more than 50 cryptocurrency firms registered, but none have been awarded a licence.

According to critics, the France crypto existing setup may lead customers to believe regulators actively control crypto enterprises. "The safety afforded by this registration is deficient, if not non-existent," said Thierry Philipponnat, a former AMF board member who left in October.

The Senate approved the proposal on Tuesday. It will be considered by France's parliament in January next year. So far, the French Government has resisted the document, claiming that hastening regulatory requirements could scare away investors.

According to France's Adan, the proposed revisions indicate that the country is "renouncing its desire" to become a crypto centre, and the government is "abandoning an industry of the future" as a result of [FTX's](/news/article/former-ftx-ceo-sbf-arrested) failure.



yellow image of Eiffel tower with crypto falling

France Crypto Rules Under Pressure

Central bank digital currencies (CBDCs) are gaining wider acceptance by the day. While only 9 countries have launched crypto CBDCs, 14 are in the pilot stage, 16 are developing technology and 40 are conducting research – in all, 87 countries are exploring CBDC technology – the race for the future of money is well and truly on. 

France is the latest country to join the discussion, as it completed the first stage of CBDC experimentation on Thursday (16th December). That said, what exactly is a CBDC?

## What is a CBDC?

A CBDC is essentially a digital form of fiat currency issued by a central bank. It can be in the form of a retail currency or a wholesale currency. A retail CBDC is intended for public use while a wholesale CBDC is meant to serve as a medium of exchange between financial institutions. 

Both forms of technology are backed by the full credit of a government. CBDCs will make purchasing goods, sending local and cross-border payments and layering possibilities on transactions much easier, among other possibilities. 

While private cryptocurrencies offer these capabilities in several shapes and forms, they are decentralised, not centralised and controlled by a government. 

## France's CBDC quest

On Thursday, The Banque de France completed the first stage of wholesale CBDC experimentation. The next step is exploring cross-border transactions. Interestingly, France has been exploring wholesale CBDC technology since March 2020. 

France conducted experiments with numerous partners, including HSBC, the final stage of which was issuing a digital bond on a blockchain with settlement in wholesale CBDC. The Banque de France is exploring a retail CBDC as well. 

## Conclusion

As private crypto assets are gaining prevalence and people are avoiding the use of cash (apps like Google Pay and [Cash App](https://cash.app/) are being increasingly used), governments all over the world are looking at CBDC technology to combine the power of crypto with the craze of digital currency.

More [Business news](/news/category/crypto-business-news).


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