Legal development

French FinTech Newsletter No.7

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    Regulation and Guidance

    1. New ARPP recommandation on communications on crypto-assets and update of ARPP recommendations on advertising in the financial sector

    #Advertising #Recommendations #crypto-assets

    On September 2023, the French Autorité de régulation professionnelle de la publicité ("ARPP") published a recommandation on crypto-assets (accessible here).

    In this recommendation, the ARPP recalls the fundamental rules for advertising crypto-assets products and services:

    • transparency of advertising: identification of the advertising nature of the communication, of the advertiser and of the product or services advertised;
    • clarity, fairness and truthfulness of advertising: no promises of systematic returns or gains; and
    • social responsibility and protection of minors.

    Generally, ARPP recommendations set up the ethical framework for advertising and are based on the International Chamber of Commerce ("ICC") Advertising and Marketing Communications Code.

    2. Synthesis of the ACPR public consultation on DeFi

    #DASP #Crypto #MiCA

    On 12 October 2023, the Autorité de contrôle prudentiel et de esolution ("ACPR") published a synthesis (accessible here in French) of its open consultation and discussion paper on decentralized finance ("DeFi").

    The consultation was launched by the ACPR in April 2023 and took the form of a discussion paper setting out an initial analysis of the risks associated with DeFi and avenues for regulation (see our FinTech Newsletters #5 and #6).

    Many stakeholders (i.e. traditional financial institutions, consulting and auditing firms as well as representatives of the crypto and DeFi ecosystem) contributed to this consultation.

    As a result, three main priorities should be addressed as part of the follow-up to the MiCA regulation:

    • issuing measures on the reliability of blockchain infrastructures;
    • drawing up rules (such as certification rules) tailored to the nature and functioning of smart contracts; and
    • defining rules for governance and conduct of operations to ensure an adequate protection of DeFi users.

    3. Pending adoption of a regime for JONUM

    #JONUM #GameFi

    On 17 October 2023, the French Assemblée Nationale adopted the bill to secure and regulate the digital space (accessible here in French), therefore introducing in its article 15 the first regulatory framework for JONUM.

    JONUM stands for "Games with monetizable digital objects" (Jeux à Objets Numériques Monétisables) and refer to online games in which players are offered the opportunity to purchase the digital objects they need to participate and progress in the game.

    In the absence of a clear legal definition, JONUM face the risk of qualifying as gambling activities where they are (i) offered to the public, (ii) giving rise to the expectation of a gain, (iii) due even partially to chance and (iv) requiring a financial contribution from the player.

    Under French law, gambling activities are prohibited, unless the video games editor can benefit from an exemption by the French national gambling authority, the Autorité Nationale des Jeux ("ANJ").

    Under the new regulatory framework, the games which (while meeting three of the four above-mentioned criteria for the definition of a gambling activity) do not include "an expectation of a gain" but rather "an expectation of receiving a monetizable digital object" (which can be an NFT) would be authorized for an experimental 3-years period.

    The ANJ will be responsible for monitoring and regulating this industry, ensuring compliance with the legislation.

    The bill is still being discussed before the French Parliament.


    1. HCJP report on the revised Payment Services Directive 2 (PSD2)

    #Report #PSD3 #HCJP

    On 20 September 2023, the Haut Comité Juridique de la Place financière de Paris ("HCJP") released a new report on the future Payment Services Directive (PSD3) regime.

    The new report follows the publication by the European Commission on 28 June 2023, of two proposals: the Payment Services Directive (PSD3) and the new Payment Services Regulations (PSR) and expresses twenty-one recommendations for the revision of PSD 2 which include notably:

    • reconsidering the definition of "e-money";
    • merging the payment services directive with the electronic money directive; and
    • clarifying the notion of "collection of funds on behalf of third parties".

    The report is accessible here (in English).

    2. AMF report on gamification and copy trading

    #Gamification #Investment #Copytrading

    On 22 November 2023, the AMF published the results of an experiment conducted at its request by the Strasbourg university laboratory, which aims to show that stimulus techniques applied to investment and derived from video games can encourage young investors to take broader risks in their financial decisions.

    Participants were invited to choose the proportion of a sum to be invested in risky assets and the proportion to be kept risk-free, with the interaction of gamification elements such as virtual badges or confetti. An increase in risk-taking was observed when participants received a trophy rewarding risky investment, and conversely a decrease in risk-taking when the trophy rewarded safe asset allocations.

    The experiment also shows the importance of copy trading, with 20% of participants choosing to copy the decisions made by those who had achieved the best performance in previous periods.

    The study is accessible here (in English).

    3. The Cour des comptes report on the regulation of crypto-assets

    #Crypto-assets #tax

    On 19 December 2023, the French Cour des comptes published a report (accessible here in French) on the regulation of crypto-assets.

    The report discusses the risks, status and controls associated with these crypto-assets, and focuses on the ongoing adaptations of regulations in France and in Europe such as the MiCA regulation.

    The report also makes six recommendations from a tax perspective such as adapting the tax framework for crypto-assets to consider the diversification of their uses and the MiCA regulation or ensuring that crypto-assets are subject to tax.

    Past Events

    1. French FinTech Week

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

    Interesting regulatory topics about Fintech's have been discussed such as:

    • French regulators reiterated their involvement in tokenised finance by supporting players in implementing the Pilot Regime and by working on the development of an interbank central bank digital currency (CBDC);
    • French regulators are already working on "MiCA 2", which should address at least two topics:
      • "crypto conglomerates" (also addressed in the work of the Financial Stability Board), which raise risks in terms of conflicts of interest, bankruptcy, and uncertainty over price formation conditions and liquidity. The ACPR would like to push for transparency rules imposed on them, including the presentation of consolidated accounts;
      • DeFI. The ACPR launched a consultation on this topic, and a summary of the feedback was published on 12 October (see above);
    • French regulators wish to see Fintech contributing as much as possible to the ecological transition. On this theme, the Banque de France will introduce a "climate indicator" to complement the financial rating of French companies. This indicator will measure the degree of preparation and consideration given to physical risks (e.g. floods, fires) and the degree of maturity in the management of the climate and energy transition, both quantitatively and qualitatively; and
    • French regulators also pointed out that many FinTech (and RegTech) companies use AI to automate certain processes, or for risk management/compliance - eg, fraud detection, generation of regulatory reports. However, AI presents certain risks, particularly in terms of lack of transparency, cybersecurity, protection of personal data, as well as market manipulation. The AMF indicated that it would actively contribute to international works on these issues.

    2. Biannual meeting of independent administrative and public authorities involved in economic affairs

    On 27 November 2023, the AMF Chairwoman welcomed the representatives of the French independent administrative and public authorities involved in the economic sphere to share their thoughts on digital technology and its evolution. These authorities included notably the French Competition Authority, the French Audiovisual and Digital Communications Regulatory Authority, the French Energy Regulatory Commission, and the French Data Protection Authority.

    The European regulation on digital services (Digital Services Act – accessible here) and the French bill to secure and regulate the digital space (latest version of the text accessible here) were also discussed.

    3. Finnov' annual event

    The annual event "Finance Innovation", also known as "Finnov'" took place on 7 December 2023. This initiative was created by the French government in 2007 to encourage innovation and research in the financial ecosystem.

    This annual meeting is an opportunity for various Web3 players to meet and attend conferences on a range of topics relating to the latest developments in digital finance (e.g., AI, payments, green finance, tokenisation).

    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 fine of EUR 100,000 for a failure to comply with its obligations relating to customer protection under the French Monetary and Financial Code and its obligations relating to AML-CFT.

    The decision is available here in French.

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

    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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