The warning of France that he could try to prevent cryptocurrency companies from operating in the country under licenses issued by other Member States of the European Union – called Passport – has raised questions on the application of the flagship law of the 27 countries.
The French securities regulator, financiers authorities of heads (AMF), is considering a ban on cryptographic companies operating in France under licenses obtained in other Member States, Reuters reported on Monday. This decision would have been concerned about the concern of the AMF according to which certain cryptographic companies are looking for licenses in milder jurisdictions of the EU.
The warning occurred less than a year after the EU markets in the Crypto-Asets (MICA) regulation entered into force for Crypto-Aset service providers. Mica was designed to create a harmonized framework across Europe and prevent the type of regulatory arbitration that the AMF drops.
While some legal experts consider this to be against Mica regulations, other industry observers say that it is technically possible.
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“Mica was designed to create a harmonized framework and give companies access to a single regulated market through the EU. This promise is now under pressure,” said Marina Markezic, executive director of the European Crypto (Euci). “From what we have seen, blocking the passport under Mica is technically possible, although it is complimented by significant legal complexity.”
Recent articles highlight “growing tensions on how mica should be applied, national authorities taking divergent opinions on key supervision issues,” she added.
On Monday, France became the third country to call for the European Securities and Markets Authority (ESMA), based in Paris (ESMA) to resume the supervision of large crypto companies, after Austria and Italy, according to a newspaper post seen by the journalists of Reuters.
Cointelegraph stretched out ESMA but had not received an answer by publication.
Some of these proposals “require legislative changes to Mica itself”, which “would reopen political negotiations and potentially bring new uncertainty to industry,” said Markezic.
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Blocking the Crypto license passport goes against the mica
Other legal experts consider the threat of the AMF as legally unrealizable under the mica regime. “Legally, the AMF cannot prevent an entity duly linked to the Mica from operating in France”, according to Edwin Mata, lawyer and co-founder and CEO of Asset Tokenization Platform Brickken.
“The AMF can monitor driving, raise supervision concerns and increase cases in ESMA, but it cannot impose unilateral obstacles”, for companies authorized in a Member State, said Mata, adding:
“Mica is a regulation, not a directive, which means that it applies directly and uniformly in all Member States.”
The messaging of the French security regulator is more a “warning” noting that France “will examine whether companies will try to structure products under Mica when they should in fact fall under Mifid II,” said MATA, referring to the framework of European markets in the Directorate of Financial Instruments II (MIFID II) for European markets.
The main challenge for regulators is to ensure that crypto companies do not take advantage of “lighter regimes” for financial instruments that should be classified as titles, Mata added.
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