French ministers have recently stated that blockchain technology, and the development of supporting regulation to foster its growth, is among the top priorities for the French government.
Minister of Economy and Finance, Bruno Le Maire, spoke to French business publication Capital at the recent Paris Blockchain Summit in April, and remarked that France will be allocating significant funds for the development of breakthrough innovation, including distributed ledger technology.
The remarks come as Le Maire also discussed that he would like to see other EU member states adopt similar cryptocurrency and blockchain regulation as France and would be urging his EU peers to align their regulatory practices accordingly.
The impetus behind the move is to adapt to changing technology and fintech markets, and establish Europe, in particular France, as strong competitors to the current dominant technology powers of the USA and China.
To aid the adoption of new technologies, including blockchain, France have made provisions under the ‘PACTE’ program, which forwards six measures to boost innovation in France. As part of this initiative, the ‘Innovation and Industry Fund’ will commit €10 billion of funds drawn from the disposals of €1.6 billion in assets from car manufacturer Renault and energy distributor ENGIE, and a remaining €8.4 billion committed from public equity securities.
It’s expected that from this investment in innovation, the French economy will receive an annual return of €200 – 250 million. The scheme indicates that remaining at the forefront of technological innovation is an ‘issue of sovereignty’, a clear sign of the French government’s commitment to innovation. At present, the PACTE law has been acquired and reviewed by the French Senate, and is now with the National Assembly and French Government for final consideration.
Under PACTE, operators of cryptoasset financial offerings, such as ICO’s, exchanges, and storage services, will be able to opt in to an authorization regime, called the AMF optional visa. This allows French blockchain companies to solicit an optional visa to confirm their compliance with best practices and reduce regulatory uncertainty. The optional visa was currently only available to ICO operators.
PACTE also offers provisions for life insurance companies to offer policies which are exposed to investments in cryptocurrencies, as it’s expected to impact the existing Professional Specialized Investment Fund rules for insurance funds, and will allow said entities to invest in cryptoassets with no upper limit.
Despite this, a recent report by the Cambridge Centre for Alternative Finance, which is examined in depth here, found that France’s current approach to blockchain regulation was the result of retrospective fitting to adhere to existing securities and commodities laws. In particular, under the 2014 publication “Position de l’ACPR relative aux opérations sur Bitcoins en France”, cryptoassets are not recognized as a legal means of payment and subsequently do not constitute as legal tender in France.
In contrast, it now seems that France will be creating new bills and legislature, starting with PACTE, to meet the growing demand for cryptoassets, and likewise to remain at the forefront of technological innovation. It’s expected that the move will make France a more attractive location for cryptocurrency companies.