CMS Expert Guide to Crypto Regulation in France

Article L. 54-10-3 of the French Monetary and Financial Code (MFC) provides that an applicant who wishes to provide the following services in France:

• custody of digital assets or access to digital assets on behalf of third parties;
• purchase or sale of digital assets in legal tender;
• exchanging digital assets for other digital assets; or
• managing a trading platform for digital asset,;

must (i) register with the AMF as a digital asset service provider (Prestataire sur actifs numériques) (PSAN) and is subject to articles L. 54-10-1 and D. 54-10-2 et seq. of the MFC and (ii) comply with the anti-money laundering and counter-terrorist financing (AML/FT) obligations in accordance with the provisions of articles L. 561-1 et seq. and R. 561-1 et seq., L. 562-1 et seq. and R. 562-1 et seq. of the MFC.

• (Staking):

Pursuant to article 12.3 of the position 2020-07 of the AMF (Position):
“Staking” activity may consist in the fact for digital assets holders of locking up their digital assets, in exchange for consideration, within a wallet (or other medium) for the purpose of supporting a distributed ledger technology using a « proof of stake » mechanism or equivalent validation mechanisms.”.

Therefore, depending on the type of services offered by the provider in connection with this activity, it may constitute a digital asset service within the meaning of article L. 54-10-2 of the MFC and/or a payment service within the meaning of article L. 314-1 of the MFC, and would entail for the service provider to be obtain a registration or licensing.

• Regarding the borrowing/lending activity (Lending):

Pursuant to article 12.3 of the position 2020-07 of the AMF (Position):
“Cryptolending” may consist in the fact for a service provider to make digital assets available to another person or entity who agrees to return them to the provider at the end of a specified period of a time”.

Depending on the type of services offered by the provider in connection with this activity, it may constitute a digital asset service within the meaning of Article L. 54-10-2 of the MFC and/or a payment service within the meaning of article L. 314-1 of MDC, and would mean that the service provider needs to complete registration or obtain a license.

Please note that for both the Staking and Lending activities, the AMF recommends providing it with a legal analysis to determine whether one (or both) of the two abovementioned regimes are applicable to their activity.

Article L. 54-10-3 of the French Monetary and Financial Code (MFC) provides that an applicant who wishes to provide the following services in France:

• custody of digital assets or access to digital assets on behalf of third parties;
• purchase or sale of digital assets in legal tender;
• exchanging digital assets for other digital assets; or
• managing a trading platform for digital asset,;

must (i) register with the AMF as a digital asset service provider (Prestataire sur actifs numériques) (PSAN) and is subject to articles L. 54-10-1 and D. 54-10-2 et seq. of the MFC and (ii) comply with the anti-money laundering and counter-terrorist financing (AML/FT) obligations in accordance with the provisions of articles L. 561-1 et seq. and R. 561-1 et seq., L. 562-1 et seq. and R. 562-1 et seq. of the MFC.

• (Staking):

Pursuant to article 12.3 of the position 2020-07 of the AMF (Position):
“Staking” activity may consist in the fact for digital assets holders of locking up their digital assets, in exchange for consideration, within a wallet (or other medium) for the purpose of supporting a distributed ledger technology using a « proof of stake » mechanism or equivalent validation mechanisms.”.

Therefore, depending on the type of services offered by the provider in connection with this activity, it may constitute a digital asset service within the meaning of article L. 54-10-2 of the MFC and/or a payment service within the meaning of article L. 314-1 of the MFC, and would entail for the service provider to be obtain a registration or licensing.

• Regarding the borrowing/lending activity (Lending):

Pursuant to article 12.3 of the position 2020-07 of the AMF (Position):
“Cryptolending” may consist in the fact for a service provider to make digital assets available to another person or entity who agrees to return them to the provider at the end of a specified period of a time”.

Depending on the type of services offered by the provider in connection with this activity, it may constitute a digital asset service within the meaning of Article L. 54-10-2 of the MFC and/or a payment service within the meaning of article L. 314-1 of MDC, and would mean that the service provider needs to complete registration or obtain a license.

Please note that for both the Staking and Lending activities, the AMF recommends providing it with a legal analysis to determine whether one (or both) of the two abovementioned regimes are applicable to their activity.

In accordance with article L. 561-2, paragraph 7 bis, of the MFC, PSAN referred to in paragraphs 1 to 4 of article L. 54-10-2 of the same code are subject to the AML/FT obligations set forth in Chapter I of Title VI of Book V of the MFC. 

In addition, PSAN are subject to obligations relating to the freezing of assets as set out in Chapter II of Title VI of Book V of the MFC.

Please note that all obligations relating to AML/FT regulations must be met and be complied with by the registered PSAN even though he does not have any physical presence in France.

I– Prohibition on canvassing activities

Article L.341-1 of the MFC defines the act of canvassing as any unsolicited contact (including physically going to places not intended for the marketing of the digital asset (DA) or service on DA) by any means whatsoever, with a specific natural or legal person with a view to obtaining, from him, an agreement, in particular on:

“8° The carrying out of a transaction on one of the digital assets mentioned in article L. 54-10-1, in particular in the context of a public offering of tokens within the meaning of article L. 552-3;

9° The provision of a service on digital assets within the meaning of article L. 54-10-2.” (we translated).

Article 341-10 MFC specifies the list of products that may not, as a matter of principle, be canvassed, which are:

“6° Digital assets mentioned in Article L. 54-10-1 of this code, except when the canvassing activity concerns the provision of a service on digital assets within the meaning of article L. 54-10-2 by a service provider approved under the conditions provided for in article L 54-10-5 or on tokens offered as part of an offer to the public that has obtained the visa provided for in article L. 552-4.” (we translated).

Thus, any act of solicitation relating to a service on AN or ANs is in principle prohibited.
However, article L. 341-10, 6° of the MFC specifies that:

“[...] when the canvassing activity relates to the provision of a service on digital assets within the meaning of Article L. 54-10-2 by a service provider approved under the conditions provided for in Article L. 54-10-5 or on tokens offered as part of an offer to the public that has obtained the approval provided for in Article L. 552-4.” (we translated).

Thus, a company will only be able to canvass potential customers for its DAs in two situations: 

1. obtaining approval as a PSAN from the AMF (different procedure than a simple registration); or
2. obtaining a visa from the AMF as referred to in article L.552-4 of the MFC concerning its DA offer.

In addition, only PSAN approved in accordance with article L. 54-10-5 of the MFC may carry out any direct or indirect advertising with the aim of inviting a person, by means of a response or contact form, to request or provide additional information, or to establish a relationship with the advertiser, with a view of obtaining the advertiser’s agreement to carry out a transaction relating to the provision of digital asset-based services for which they are approved (L. 222-16-1 of the French Consumer Code).

II – Obligation on physical presence

Article 721-1-1 of the AMF General Regulation (règlementation générale de l’AMF) (RGAMF) provides:

“Pursuant to article L. 54-10-3 of the French Monetary and Financial Code, a digital asset service is considered to be provided in France when it is provided by a digital asset service provider having facilities in France or when it is provided at the initiative of the digital asset service provider to customers residing or established in France.”(we underlined).

Article 721-1-1 of the RGAMF also specifies that the PSAN is providing a service in France when certain non-exhaustively listed criteria are met.

Thus, pursuant to article 3.3 of the Position, providing that the PSAN is established in another Member State of the European Union (or in a State party to the Agreement on the European Economic Area), the registration does not require: 

1. an establishment in France, neither in the form of a subsidiary nor in the form of a branch; and/or
2. the permanent presence of representatives of the PSAN, domiciled in France.

In the absence of a European passport, the PSAN will have to register in France if it falls within the scope of the mandatory registration.