France adopts a regulatory framework for blockchains

After being one of the first countries in the world to give legal force to the use of blockchain technology for registration and transfer of securities, France has strengthened its pioneering position by finalising one of the world's most exhaustive frameworks bearing on digital assets, covering regulatory, fiscal and accounting aspects alike.

For the Minister of Economy and Finance, Bruno Le Maire, the Decree published on 22 November 2019 will "promote development of a dynamic, robust blockchain ecosystem in France, combining capacity for innovation, transparency and a high level of security for savers and investors".

The Decree adds the finishing touch to the legal framework specific to these digital assets, created by the Pacte Act:

• on the primary market, it was already possible for issuers to request a visa from the French Financial Market Authority (Autorité des marchés financiers – AMF) prior to their Initial Coin Offering (ICO), directly pursuant to the Pacte Act.
• As regards the secondary market, the Decree outlines digital asset service providers' statuses, henceforth enabling them to request approval from the AMF.

Obtainment of such approval is subject to compliance with the legal provisions specified by the Decree. These include obligations on cybersecurity and in terms of equity capital and insurance, along with obligations specific to each service (for example, for a custodial service, the obligation to restore control of the digital assets held in custody). For certain types of service providers, this optional approval is complemented by registration in respect of regulations against money laundering and the financing of terrorism.

The Decree also improves access to banking services on the part of issuers to which the AMF has granted an ICO visa and registered or approved digital asset service providers. In the event of unjustified refusal of access to account and deposit services, even if only implicit, issuers and service providers will be able to lodge an appeal with the Prudential Supervision and Resolution Authority (Autorité de Contrôle Prudentiel et de Résolution – ACPR) with a view to initiating proceedings to enforce their right to banking services.