FinTech Newsletter No 5 January 2023 - March 2023

Regulation and Guidance

1. Speech by Marie-Anne Barbat-Layani – Chair of the AMF

#crypto #customer protection #influencers

On 9 January 2023, the Chair of the AMF, Marie-Anne Barbat-Layani discussed the roadmap and priorities of action of the AMF for 2023 (accessible here in French).

Ms. Barbat-Layani confirmed that the AMF is a regulator open to innovation, and called, after mentioning the FTX case, for regulation of the crypto universe in order to protect investors, in particular by supporting an acceleration of the transition to mandatory license for digital assets services providers (DASPs) that are not currently registered (see no. 9). She also welcomed the initiative of the French Ministry for the Economy to investigate the role of influencers and affirmed the AMF's intention to increase roughness and oversight of the FinTech field (see no. 6).

2. Supervision of banking offers for minors

#customer protection #banking #minors

On 10 January 2023, the ACPR published the results of a survey conducted in 2022 on 12 payment service providers (PSP) regarding banking offers aimed at minors aged from 12 to 17. ACPR called to PSP to adapt their offers to this type of customer. The ACPR identified shortcomings and areas for improvement in the various offers studied and made recommendations for the PSP such as the establishment of internal mechanisms to detect abnormal transactions and situations requiring enhanced monitoring of the minor.

See all the results here in French.

3. Speech of the First Deputy Governor of Banque de France on the opportunities and challenges of the tokenization of finance

#regulatory #tokenization

On 17 January 2023, Mr. Beau, the First Deputy Governor of the French Central Bank (Banque de France), gave a speech at the European and American Chamber of Commerce event in New York (accessible here in English). On this occasion, he stated that the tokenization of finance is of prime interest because it is part of the significant transformation drivers of our financial landscape, but also because of the two-sided impact it might have on the functioning of our financial system, both in terms of efficiency and stability.

In addition to supporting the adoption of a European regulatory framework that fosters trust, Mr. Beau emphasized the role of the Banque de France in the large-scale wholesale central bank digital currency (CBDC) experimentation program and its contribution to the ongoing reflection on the possibility of a retail CBDC; Eurosystem central banks are currently involved in this project, under the European Central Bank aegis, with the ongoing investigation phase for a digital euro.

4. Adoption and publication of law no. 2023-22 of 24 January 2023 on the orientation and programming of the Ministry of the Interior

#seizure #digital assets

On 25 January 2023, the law no. 2023-22 on the orientation and programming of the French Ministry of the Interior (LOPMI law) (accessible here in French) was published in the Journal Officiel of the French Republic. This law notably improves the responsiveness of digital assets seizure operations. The LOPMI Law amends Article 706-154 of the French Criminal Procedure Code, in order to allow a judicial police officer to proceed, with the authorization of the public prosecutor (procureur de la République) or the investigating judge (juge d'instruction), to the seizure of digital assets.

5. ADAN: press release about DAOs and regulatory challenges in France

#DAO #regulatory

On 29 January 2023, the French Association for the Development of Crypto-Assets (ADAN) published a press article in which it recalls the role of the Decentralized Autonomous Organizations (DAOs) and how they function (accessible here in French). The ADAN underlines the various risks associated with DAOs, especially technological and political. It also recalls that the absence of a recognized and established legal structure in France is one of the fundamental problems of DAOs and that, in this respect, the establishment of a legal framework would be necessary to avoid the reclassification of DAOs as "de facto companies" (sociétés de fait).

6. Proposed bill to regulate commercial influence and to fight against the abuses of influencers on social networks

#influencers #consumer protection #promotion

On 31 January 2023, a bill aiming to improve the protection of consumers and social network users has been submitted to the French National Assembly (accessible here in French). This bill notably proposes to (i) define the status of influencers and (ii) prohibit such influencers from promoting financial investments and digital assets on social networks that carry a risk of loss for consumers. This bill was adopted by the French National Assembly on 30 March 2023.

This bill is part of a general desire by the public authorities to regulate the profession of influencer. To this end, Bruno Le Maire, the French Minister for Economics Affairs, Finance, Industry and Digital Sovereignty launched a public consultation on 8 January 2023, which ended on 30 January, to allow all French people to express their views on 11 measures divided into four themes (the rights and obligations of influencers, intellectual property, consumer protection and governance). At a press conference on 24 March 2023, Bruno Le Maire presented the first measures to regulate influencers and protect consumers resulting from this work.

The press release to see the measures and the guide of good conduct for influencers is available here (both in French).

7. ACPR announced its supervisory priorities for 2023

#crypto #supervision priorities

On 15 February 2023, the ACPR published a press release in which it defined its priorities for ensuring the stability of the financial system (accessible here in French).

In this document, the ACPR notably specifies that in relation to AML-CTF it will carry out inspection campaigns targeting DASPs and participate in the negotiation of the "AML package" presented by the European Commission in 2021.

8. Application of the EU DLT Pilot Regime from 23 March 2023

#DLT Pilot #registration #intermediaries

On 23 February 2023, the AMF published a press release (accessible here in English) to remind stakeholders that :

(i) the application date of the EU regulation no. 2022/858 on a pilot regime for market infrastructures based on DLT was 23 March 2023;

(ii) the ESMA published recent documents in relation to such regulation; and

(iii) the French national legal framework is in the process of being adapted in order to align it with the European Pilot Regime framework and to clarify the role of the French national competent authorities.

9. Adoption of the so called 2022-2023 DDADUE bill

#DASP #registration #crypto #DLT Pilot

On 28 February 2023, the French National Assembly adopted the so called 2022-2023 DDADUE bill (accessible here in French) issued from the consensus reached by a joint committee (commission mixte paritaire).

This bill includes provisions impacting the French current DASP regime by creating a "reinforced" registration procedure with the AMF. In order to be registered as DASP under this new regime, applicants will have to meet additional requirements (in addition to those already applicable under the current registration regime) including:

• having a resilient and secure IT system to avoid cyber-attacks;
• having an internal conflict of interest policy in place;
• having clear and non-misleading communication to customers;
• having an adequate security system in place; and
• complying with specific requirements depending on the service on digital assets provided by the applicant.

This bill also includes provisions (i) to adapt French law to the DLT Pilot Regime Regulation, and (ii) authorizing the French Government to take measures to adapt French law to the future EU Regulation on Markets in Crypto-assets (MiCA) within a maximum of one year.

This law was published in the Official Journal of the French Republic on 10 March 2023, and came into effect the following day.

10. ACPR public consultation on the regulation of DeFI

#DeFI #consultation

The ACPR recently published a public consultation in which it invited stakeholders to participate in a reflection on the future of financial services, based on a document that proposes an analysis of the structure and risks of disintermediated/decentralized finance (DeFI) and its various components before formulating different regulatory framework scenarios. The consultation is open until 19 May 2023.

The discussion paper and the consultation questionnaire are available here in English.

11. Public consultation on metaverse

#metaverse #consultation

Until 2 May 2023, the French Directorate General for Enterprises is organizing a public consultation on virtual immersive worlds (“metaverse”). The aim of this consultation is to allow various stakeholders (citizens, companies, associations, researchers) to express their expectations on this evolving subject in order to design a French strategy capable of anticipating this transition from the point of view of the important technological bricks and to propose an alternative to the virtual immersive universes currently offered by the international players.

The consultation questionnaire is available here (in French).

The European Commission has also launched a public consultation on metaverse, available until 2 May 2023 (available here in English).

Report

National analysis of money laundering and terrorist financing risks in France

#AML-CTF #risks

On January 2023, the Anti-Money Laundering and Counter-Terrorist Financing Policy Board (Le Conseil d'orientation de la lutte contre le blanchiment des capitaux et le financement du terrorisme – COLB) published an updated report of the national analysis of money laundering and terrorist financing risks, which takes into account the FATF recommendations and has benefited from the contributions of professionals from all sectors of activity subject to the fight against money laundering and terrorist financing (AML-CTF). This updated report enables entities subject to AML-CTF obligations to better identify the risks they face in their respective activities, based on the experience of government departments, with illustrative examples. It also highlighted the mitigating measures taken by France to deal with these risks. A whole chapter is dedicated to Banking, Financial Services and Insurance and another to Financial Innovations (i.e. digital assets and crowdfunding).

See the report here in French.

Events

1. Roundtable on the issue of regulation and innovation in the field of crypto assets

On 1 March 2023, Bertrand Peyret, Deputy General Secretary of the ACPR, along with Marie-Anne Barbat-Layani, Chair of the AMF, Faustine Fleuret, Chair of the ADAN, and Nicolas Louvet, CEO of Coinhouse, participated in a roundtable discussion on regulation and innovation in the field of crypto-assets organized by the Senate Finance Committee.

During this discussion, the Deputy General Secretary of the ACPR had the opportunity to recall France's early choice to regulate crypto-assets, in particular with the implementation of reinforced registration for DASPs, which includes an important cybersecurity component, and the upcoming developments with the entry into force of MiCA. He also stressed the importance of the AML-CTF and outlined that the control over registered DASPs by the ACPR would be strengthened this year.

The replay is available here in French.

2. ADAN – Ethereum France: regulation of DeFI and DAOs

On 23 March 2023, the ADAN and Ethereum France co-organized a panel on regulation of DeFI and DAOs in France and Europe at Cometh.

The replay is available here in French.

3. French Tech 2030

The French government recently launched a program, French Tech 2030, aimed at supporting the emergence of innovative players in key strategic sectors by providing them with tailored support (including a diagnosis of their needs and the state levers available to boost their development).

The objective is to identify emerging players with the highest potential for growth, impact, and boldness. French Tech 2030 is accessible to emerging players who have already launched an innovative activity or who are about to do so.

Applicants may submit their applications under the dedicated call for applications until 8 May 2023 (accessible here in French).

Authors: Hubert Blanc-Jouvan, Partner; Agathe Motte, Partner; Maxime Gandibleux, Counsel; Aurélien Fournier-Her, Counsel; Francesco Assi, Senior Associate; Oriane Lemesle, Associate; Lucien Jarry, Associate