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In addition, service providers will have to comply with a set of standard rules, such as requirements on anti-money laundering and countering terrorist financing, cyber security obligations, good repute and competence, conduct, governance, management of conflicts of interest, and, where applicable, requirements around custody of funds and segregation of assets. MiCA also imposes specific obligations depending on the type of services offered.
MiCA will replace the existing PACTE regime in France for market participants wishing to launch their business on or after 30 December 2024.
1. EU Regulation on markets in crypto assets (MiCA)
Objectives and scope: The MiCA Regulation, adopted by the European Union, establishes standard rules and requirements for cryptocurrency services and the cryptoasset market. Starting December 30, 2024, all service providers seeking to provide crypto assets in the EU must be authorized.
Critical provisions of MiCA:
2. French national legislation on the implementation of MiCA
The PACTE Law introduced two types of registration for crypto-asset service providers: simple and advanced. However, with the implementation of the Markets in Crypto-Assets Regulation (MiCA), the Personalized Crypto-Asset Service Provider (PSAN) regime is gradually being replaced by the MiCA Regulated Services (PSCA). Commencing from January 1, 2024, there will be stricter standards for PSANs, including the following:
1. Asset Segregation: This entails the mandatory separation of client assets from platform assets to protect client funds in the event of insolvency or other financial difficulties the platform faces.
2. Disclosure of Risks and Conflicts of Interest: Platforms must provide comprehensive transparency regarding potential risks associated with investing in crypto-assets and disclose any conflicts of interest that may affect their clients.
3. Obtaining Consent for the Use of Assets: Platforms must obtain explicit consent from clients before using their assets for any purposes, ensuring that clients have complete control over their funds.
To effectively combat money laundering and terrorist financing, it is essential to comply with Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) obligations. This includes the mandatory appointment of responsible individuals and the developing of comprehensive protocols to detect, prevent, and report suspicious activities. Furthermore, under the European Passport mechanism, French Payment Service Providers and Credit Institutions (PSCAs) have the privilege to operate across the EU market without needing additional licenses in each country. This streamlines their ability to provide services and conduct operations within the European Union.
French regulations, such as the PACTE, the complementary DDADUE, and AMF regulations, are among the primary sources for preparing documentation for obtaining a full CASP (Crypto-Asset Service Provider) license under MiCA. These acts adapted some national requirements, but most provisions are aligned with MiCA and follow European standards.
Currently, the AMF has updated the provisions of its General Regulation (Book VII) and the guidelines for digital asset service providers (DASPs) in line with the MiCA. They include guidelines for enhanced registration, which is an intermediate step to a full CASP license. These requirements include documents that must be submitted, in particular
French providers with a DASP registration can use the “fast track” to switch to a CASP license, but they must meet the expanded requirements. The AMF also offers guidelines DOC-2019-23 and DOC-2019-24 detailing registration and security preparations to facilitate the submission of complete documentation for a CASP license by the end of 2024, when MiCA becomes mandatory in the EU.
The French rules broadly refer to MiCA, providing the necessary flexibility for a smooth transition and allowing national companies to prepare for European standards without significant duplication of requirements.
The regulatory functions and powers of the AMF (Autorité des Marchés Financiers) and the ACPR (French Prudential Supervision and Resolution Authority) are divided as follows:
AMF:
The AMF is responsible for handling applications for authorization of cryptocurrency service providers (CASPs) under the European MiCA regulation. It also supports French crypto companies by organizing resources, workshops, and guidance materials to help them adapt to MiCA. Additionally, the AMF ensures that these companies comply with anti-money laundering (AML) and counter-terrorist financing (CFT) standards. They collaborate with ESMA (European Securities and Markets Authority) to implement unified measures and oversee the implementation of CASP standards related to customer protection, corporate governance, disclosure, and transparency.
ACPR:
As the banking and financial stability regulator, the ACPR plays a crucial role in overseeing cryptocurrency operations to ensure their strength and adherence to the French economic system. Collaborating with the AMF, it manages the transition from the PSAN regime to the PSCA (the new MiCA regime), ensuring that cryptocurrency service providers meet the required financial safeguards and transaction controls. While the AMF focuses on supervising market aspects and compliance with MiCA standards for cryptocurrency providers, the ACPR is primarily responsible for ensuring financial stability and compliance at the national level.
Providers already offering digital asset services in France based on a ‘simple’ or ‘enhanced’ registration as a digital asset services provider (DASP), or of an optional DASP authorization obtained under the PACTE Law, or providing services that are not currently subject to mandatory registration (such as Financial Investment Advisors (FIA) advising on crypto-assets, for example) will be able to benefit from a transition period. These providers will have until 30 June 2026 to obtain MiCA authorization to continue providing their activities beyond 1 July 2026.
However, the AMF wishes to point out that ‘simple’ or ‘enhanced’ registration or an optional authorization does not allow to benefit from the European passport during the transition period. Therefore, it will not be possible for market participants who have obtained either of these to offer their services under the European passport regime until they have obtained MiCA authorization. These providers are responsible for ensuring the legality of their services in other Member States during this transition period.
The European legislators’ requirements for MiCA authorization are more stringent than those stipulated in the French legislation regarding ‘enhanced’ DASP registration and even more so regarding ‘simple’ DASP registration. The AMF, therefore, encourages interested parties to prepare as early as possible.
Transition and Preparatory Measures in France
1 January 2024: From this date, all Digital Asset Service Providers (DASPs) in France seeking new registrations must adhere to enhanced requirements, including:
– Asset Segregation: DASPs are required to separate client assets from platform assets to provide increased protection for investors.
– Disclosure Obligations: Providers must disclose relevant risks and conflicts of interest transparently.
– Customer Consent for Asset Use: Platforms must obtain explicit client consent before utilizing their assets.
DASPs registered before 1 January 2024 can continue to operate under previous, less stringent regulations until 30 June 2026. This grace period allows existing providers to transition to MiCA standards without service interruptions.
30 December 2024: The EU-wide Crypto-Asset Service Provider (CASP) license, incorporating MiCA requirements, becomes mandatory for crypto service providers operating across the EU. CASP licensees can utilize the EU passporting mechanism to extend their services to other EU member states without requiring additional national licenses. To qualify, CASPs must meet standards for operational resilience, anti-money laundering (AML) protocols, and reserve requirements for asset-referenced tokens (ART) and e-money tokens (EMT).
30 June 2026: French DASPs benefiting from the grandfathering provision must fully comply with MiCA standards by this date. This final deadline marks the conclusion of the phased compliance period, after which all crypto service providers, whether new or established, will be required to operate under MiCA’s uniform standards throughout the EU.
The transition from PSAN (the French designation for crypto-asset service providers) to the new MiCA-regulated PSCA regime involves several key steps:
During the transition period, PSANs can continue operating, but they must obtain PSCA status to ensure compliance with MiCA’s upcoming rules. If a PSAN wants to offer additional services after January 1, 2024, it must apply for MiCA authorization (PSCA status) instead of relying on its existing PACTE authorization.
MiCA introduces specific transitional rules to allow registered PSANs to continue their activities while transitioning to MiCA compliance. This includes:
MiCA allows a simplified authorization procedure for PSANs already authorized under national law (PACTE in France). This is designed to ease the transition for entities that are already regulated. Under this procedure:
The transition involves several legal and operational adjustments:
MiCA imposes several new obligations on crypto-asset service providers, including:
The transition from PSAN to PSCA under MiCA represents a significant regulatory shift for French crypto-asset providers. The timeline is set, with crucial deadlines in December 2024 and July 2026, and providers must take proactive steps to ensure compliance, especially by utilizing transitional provisions and simplified authorization processes.
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Manimama Legal & Growth Agency provides a gateway for the companies operating as the virtual asset wallet and exchange providers allowing to enter to the markets legally. We are ready to offer an appropriate support in obtaining a license with lower founding and operating costs. We offer KYC/AML launch, support in risk assessment, legal services, legal opinions, advice on general data protection provisions, contracts and all necessary legal and business tools to start business of virtual asset service provider.
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