Legal development

French FinTech Newsletter No.6

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    Regulation and guidance

    1. New decree amending the definition of the 'reception and transmission of orders' ("RTO") service

    #RTO #Crowdfunding #Investment Services

    Decree no. 2023-813 of 22 August 2023 (accessible here in French), published on 24 August 2023 on the Official Journal of the French Republic, amends the definition of the RTO service (included in the French Monetary and Financial Code).

    This new definition broadens the definition of the RTO service by removing the criterion that orders (in relation to financial instruments) must be transmitted to an investment services provider ("ISP") based in the EEA (or to an equivalent third-country entity).

    The amendment aims to:

    • align the definition of this service with the entry into force of the Regulation (EU) 2020/1503 (the "Crowdfunding Regulation"), with a view to cover the reception and transmission of orders by crowdfunding services providers (which may transmit orders to an entity that is not an ISP e.g., an issuer or a project owner); and
    • foster alignment of the French definition of the RTO service with those of other European countries, in the absence of a harmonised definition of this service under Directive 2014/65/EU (MiFID 2).

    This decree came into force on 1 September 2023. 

    2. New decree on the implementation of the 'enhanced' registration procedure for digital asset service providers ("DASPs") and amendment of AMF general regulation and doctrine on DASPs

    #DASP #Crypto #MiCA

    Decree no. 2023-787 of 17 August 2023 (accessible here in French), published on 19 August 2023 amends the regulatory part of the French Monetary and Financial Code to adapt it to the 'enhanced' registration regime for DASP resulting from Article 8 of the so-called DDADUE Law (see point 9 of the French FinTech Newsletter no. 5).

    In the same way, the Autorité des marchés financiers ("AMF") recently amended the provisions of its General Regulation and its policy on the DASPs regime (i) to take into account the 'enhanced' registration regime introduced by the DDADUE Law, but also (ii) to align the requirements applying to the DASPs licence (i.e. the optional regime) with those applying to the authorisation for crypto-asset service providers ("CASPs") under European Regulation on Markets in Crypto-Assets (“MiCA“), and (iii) to allow a fast-track procedure to be implemented towards CASP authorisation. A summary of such amendments is available here in English.

    These provisions will come into force on 1 January 2024.

    3. Bill to secure and regulate the digital space

    #Web3 #Cloud #Anti-scam

    On 5 July 2023, a bill designed to "secure and regulate the digital space" in order to develop confidence in the ongoing digital transition (accessible here in French) was adopted by the French Senate. The bill is structured around four matters (citizens, children, businesses and communities, and democracy) detailing 12 measures. 

    These measures are notably designed: 

    • to reduce companies' dependence on cloud providers, by guaranteeing users' ability to freely choose the cloud service providers that best meet their needs; 
    • to create an anti-scam cybersecurity filter in order to warn French users when – after receiving a fraudulent SMS or e-mail – they are about to be directed to a malicious website; 
    • to ban people convicted of cyberbullying from social networks; and
    • to regulate games based on emerging Web3 technology by introducing a user protection regime.

    The French National Assembly is now due to examine the bill in October 2023.

    4. Publication of AMF position 2023-05 on marketing communications from Crowdfunding Services Providers ("CSPs")

    #Crowdfunding #CSP

    On 16 June 2023, the AMF published a new position (accessible here in English) setting out the requirements applicable to marketing communications issued by CSPs. 

    The purpose of this position is to specify the AMF’s expectations regarding the language and content of marketing communications issued by CSPs, relating to crowdfunding offers involving financial securities or loans in light of the Crowdfunding Regulation and the provisions of the French Monetary and Financial Code relating to crowdfunding.

    5. MiCA published in the EU Official Journal – next milestones

    #DASP #Crypto #MiCA

    On 12 June 2023, the AMF published a press release (accessible here in French) to announced that MiCA was published in the Official Journal of the European Union on 9 June 2023. It will come into force on 29 June 2023.

    The AMF reminds the key dates that service providers and market players should keep in mind :

    • MiCA will apply from 30 December 2024, with the exception of the provisions on stablecoins, which will apply from 30 June 2024;
    • from 30 December 2024, CASPs providing their services on crypto-assets in the Union and not benefiting from the transitional period will be subject to a mandatory licence allowing them to provide their services throughout the European Union;
    • the date of 30 June 2026 will mark the end of the 18-month transition period that will be granted to DASPs that have obtained "simple"/“enhanced" registration or optional licence with the AMF or are providing services not subject to mandatory registration before 30 December 2024; and
    • from 1 July 2026, DASPs will need a MiCA-compliant authorisation to continue offering their services.

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

    #Influencers #Social Networks #Tokens

    On 10 June 2023, the law no. 2023-451 aimed at regulating commercial influence and preventing abuses by influencers on social networks (accessible here in French) was published in the Official Journal of the French Republic.  

    In addition to defining influencer activity, the law introduces provisions into the French Monetary and Financial Code to better regulate and sanction risky offers promoted by influencers on social networks. 

    In particular, direct and indirect promotional activities can only be carried out by influencers with respect to: 

    • assets linked to services for which the advertiser is registered or approved by the AMF;
    • services provided by an advertiser registered or approved by the AMF; and
    • public offerings of tokens whose issuer has obtained AMF approval.

    7. Decree adapting French securities law to the DLT Pilot Regime Regulation

    #DLT #Pilot Regime

    On 2 June 2023, the decree adapting French securities law to the EU DLT Pilot Regime regulation was published in the Official Journal of the French Republic. 

    It amends the regulatory part of the French Commercial Code and of the French Monetary and Financial Code to ensure that national law complies with the EU DLT Pilot Regime regulation.

    The modifications are available here in French.

    On 12 April 2023, the AMF, the Banque de France and the ACPR informed DLT market infrastructure project developers, on the entry points for filing their applications for specific permissions, exemptions and/or compensatory measures (accessible here in French).

    Respectively on 4 May 2023 and 21 April 2023 (accessible in French here for AMF and here for ACPR), the AMF and the ACPR declared they would comply with the ESMA guidelines of 8 March 2023 on the standardized forms, formats and templates to be used to request authorization to operate a market infrastructure under the DLT Pilot Regime. 

    8. Annual report of the AMF Ombudsman

    #Crypto #Ombudsman #Annual report

    On 1 June 2023, Marielle Cohen-Branche, the AMF Ombudsman, presented her 2022 annual report at a press conference and talked about the main fields of intervention of the AMF Ombudsman, which notably covers crypto-assets. 

    In 2022, the mediation service received 54 cases relating to crypto-assets, 17 of which were admissible. The reasons for the cases were diverse, and included in particular computer incidents, hacking and incidents involving stablecoins, and earnings generated by transactions involving the immobilisation or lending of digital assets (staking, crypto-lending), etc.

    The report is accessible here in French. 

    9. ACPR open consultation and discussion paper on Decentralised Finance ("DeFI")

    #DeFI #Consultation

    On 3 April 2023, the ACPR published an open consultation and discussion paper (accessible here in English) on DeFI. This document analyses the structure and risks of DeFI and its various components, as well as ideas for consideration for future regulations. 

    To avoid the pitfall of trying to replicate the existing regulatory framework only and exhaustively, the ACPR points out several avenues for regulation: 

    • ensuring the resilience of blockchain infrastructures; 
    • strengthening the security of smart contracts via a certification mechanism; and 
    • providing a better framework for the provision of services and access to users, notably through tighter control of intermediaries. 


    1. Banque de France's report on its wholesale Central Bank Digital Currency ("CBDC") experiments using DLT technology

    #CBDC #DLT #Experiments

    On 21 July 2023, the Banque de France released a new report concerning its wholesale CBDC experimentation program, launched in March 2020, and comprising twelve experiments.

    Thanks to these experiments, the Banque de France demonstrated the operational feasibility of the three models used for issuing CBDC directly on DLT, i.e., the interoperability model, the distribution model, and the integration model.

    These three models have been tested with different types of DLT and for a wide range of use cases, covering two major strategic areas: the tokenization of finance and the enhancement of cross-border transactions.

    Through these experiments, the Banque de France was able to draw strategic and technical lessons and to set out the next steps and objectives for the future, which include supporting the Eurosystem exploratory work and exploring the boundaries of cross-border payments.

    The report is accessible here (in English).

    2. Report on commercial tokens in the French economy

    #Tokens #Crypto 

    On 18 July 2023, the French General Inspectorate of Finance (Inspection Générale des Finances) published a report about commercial tokens (i.e., tokens, fungible or non-fungible – NFT – that are sold as products or are associated with an act of sale of real products) in the French economy, their use cases and legal issues.

    If the French public authorities wish to encourage the development of commercial tokens in the French economy, a number of issues need to be addressed in order to provide greater legal certainty for players and to control the associated risks. In particular:

    • the nature of the rights associated with tokens must be clearly established and made public when they are issued, in order to protect consumers;
    • from a tax point of view, commercial tokens are not suited to the regime designed for digital assets by the PACTE Act; and
    • MiCA will replace the regulatory framework established by the PACTE Act. However, its scope of application raises several questions of interpretation. Non-fungible tokens and peer-to-peer trading platforms are excluded from its scope, despite the risks they pose in terms of market abuse and anti-money laundering and combating the financing of terrorism ("AML-CFT"). The report recommends including non-fungible tokens in the scope of the regulation, introducing an ad hoc regime for peer-to-peer platforms and prohibiting issuers from redeeming tokens. 

    The report is accessible here (in French). 

    3.  ACPR: publication of a Sector Risk Analysis ("SRA") on AML-CFT

    #AML-CFT #Risk Analysis 

    On 29 June 2023, the ACPR published its SRA (accessible here in French), updating the last SRA published in 2019.

    The SRA aims to provide guidance for the ACPR's anti-money laundering and AML-CFT supervisory activities and to make it easier for organisations to carry out their own AML-CFT risk assessments.

    In particular, the ACPR:

    • recalls the risks associated with products that enable anonymity, such as digital assets and at a lesser extent, anonymous e-money and virtual IBANs;
    • indicates the mitigation measures provided by either AML-CFT rules or other regulatory requirements, as well as the monitoring and awareness actions carried out by the ACPR; and 
    • considers as very high the AML-CFT risks in, among others, the fields of e-money and digital assets.  

    As mentioned in the French FinTech Newsletter no. 5, the ACPR has announced, as part of its 2023 supervisory priorities, its intentions to carry out inspection campaigns targeting DASPs to ensure they comply with their AML-CFT requirements.

    4. Institut Montaigne report: "Blockchain, Consolidating our assets"

    #Blockchain #DLT #Web3

    In June 2023, the Institut Montaigne (which is a French think tank) published a report on blockchains (accessible here in French) to clarify their definition, nature, contours, use and concrete contributions. 

    The report also highlights France's role within the international blockchain ecosystem. It presents France's technical and regulatory strengths, as well as the 8 action levers that need to be developed to increase France's competitiveness and enable it to assert its European leadership in this field.

    5. ADAN: study on the challenges of DeFI in Europe and report on Web3 and crypto in France and Europe

    #Crypto #DeFI 

    On 14 April 2023, the French Association for the Development of Digital Assets ("ADAN") published the new edition of its study on the level of adoption of digital assets by the general public and on the different uses of digital assets in different industries. The result of the study is accessible here (in French).

    On 29 April 2023, the ADAN published a report (accessible here in English) on the challenge of DeFI regulation with its recommendations. The report considers the risks and challenges of DeFI, before giving the ADAN’s thoughts on building a framework of trust for users and project owners, while allowing effective supervision by the competent authorities in Europe.

    Upcoming event 

    1. French FinTech Week

    From 6 to 20 October 2023, the third French Fintech Week will be held, organised by France FinTech (an association representing start-ups in the financial sector), Paris&Co, the ACPR and the AMF. 

    Various events will be held during the week, including the Fintech Cup 2023, a three-day regatta for fintech entrepreneurs, the INNN 2023, an event devoted to insurance issues organised by French Assurtech, the eighth FinTech R:Evolution 2023 and the ACPR-AMF Fintech Forum with conferences and workshops on the challenges of regulation and supervision.

    The detailed program will be updated and is available here in French. 

    Sanctions and decisions

    1. ACPR –Sanction Commission 

    19 April 2023, no. 2022-02

    #Payments #AML-CFT 

    The ACPR sanctioned a French payment institution with a reprimand (blâme) and a financial penalty of Euro 1,000,000 for a failure to comply with its obligations under the AML-CFT and freezing of assets regulations.

    The decision is available here in French.

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.


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