France Eyes Blocking Crypto 'Passporting' Over Regulatory Concerns

France is considering using its leverage to challenge the "passporting" of crypto licenses within the European Union, a move that could significantly impact crypto firms operating across the bloc. This comes amid growing concerns about regulatory arbitrage, where companies seek out EU member states with more lenient licensing requirements under the new Markets in Crypto-Assets (MiCA) framework.

Centralized Oversight Sought

France, along with Italy and Austria, is advocating for the European Securities and Markets Authority (ESMA) to take over the supervision of major crypto firms. These nations argue that the current decentralized approach, where individual member states grant licenses, leads to inconsistencies and potential regulatory gaps.

Concerns over Regulatory Arbitrage

The French financial watchdog, AMF, fears that crypto companies are strategically choosing jurisdictions with less stringent licensing standards to obtain a "passport" allowing them to operate throughout the EU. This "regulatory shopping" could undermine the effectiveness of MiCA and expose investors to greater risks.

"Atomic Weapon"?

The AMF has warned it might use its power to challenge licenses granted by other member states, describing it as an "atomic weapon" due to the potential disruption to the EU's single market. While no specific companies were named, the threat underscores France's determination to ensure robust and consistent regulation of the crypto industry.

Key Takeaways:

• France is concerned about crypto firms exploiting regulatory differences within the EU's MiCA framework.
• France, Italy, and Austria want ESMA to have direct oversight of major crypto companies.
• The AMF is prepared to challenge crypto licenses granted by other EU member states if necessary.
• The current system of regulatory "passporting" may be revised to address concerns about uneven supervision.