The regulation will take effect later this month, and cryptocurrency companies that voluntarily comply with capital standards and consumer protection requirements and who are taxed in France can be approved by the regulatory body.
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Anne Marechal, executive director of legal affairs at the French Financial Markets Authority, said, “France is a pioneer. We will have a legal, tax and regulatory framework.”
She also said, “We are negotiating with three or four candidates for the initial currency issuance (ICO).” In addition, regulators are negotiating with several other cryptocurrency trading platforms, custodians and fund managers.
Cryptographic currencies are subject to incomplete regulatory rules worldwide, and most of their technology is unregulated. Although some small countries from Belarus to Malta have enacted specific laws, major economies still tend to adopt existing financial rules.
Since Facebook announced its Libra cryptocurrency program last month, cryptocurrencies have been scrutinized globally. Facebook has raised concerns about privacy, consumer protection and systemic risk among politicians and financial regulators in the US and elsewhere.
Some encryption-related companies and industry associations have called for regulation in this area, in part because of the desire to be clear about the law.
Frederic Montagnon, co-founder of LGO, which will launch ICO's cryptocurrency platform in France, said, "When you are an entrepreneur, the worst thing that can happen is to create your business without supervision, because of the disadvantages of the future. The regulatory framework can jeopardize your entire business."
France is setting up a working group in the G7 group to study how the central bank can ensure that digital currencies like Libra are regulated. ECB policy maker Benoit Coeure will present a preliminary report on the matter at the G7 finance ministers meeting this week.
Last year, due to the prosperity of ICO, Paris first proposed a plan to attract cryptocurrency issuers to France. Since then, hundreds of new cryptocurrencies have been issued each month, raising billions of euros. But then the number of ICOs has fallen dramatically as cryptocurrency issuers have turned to other forms of fundraising. (than push)