SEC’s Stuttering Litigation Strategy Draws Comment From France

PARIS, France – Officials in France are boasting of the regulatory certainty they can offer, as U.S. enforcers wage a fierce – if not entirely successful – war on crypto.

With a crypto registration regime in effect for years, new EU laws set to take effect in 2024, and lawmakers discussing a regime for , officials are bullish about the country’s preparedness for Web3, a conference organized by lobby group ADAN was told.

MiCA, which lets wallet providers and exchanges operate across the EU with a single license, “will allow this sector to go to the next gear in terms of regulatory requirements,” said Marie-Anne Barbat-Layani, adding that France’s Financial Markets Authority (AMF), the regulator which she chairs, is “resolutely open to innovation.”

Barbat-Layani contrasted France’s situation with that across the Atlantic.

“Some of our peers, notably the U.S. SEC [Securities and Exchange Commission], have launched litigation strategies – strategies of which the successes aren’t totally clear – but which seek to treat crypto as a traditional financial instrument,” she said. “It’s a different choice to that made in Europe.”

MiCA, which passed into law in June and takes full effect in December 2024, adapts existing rules for trading in financial instruments, while the SEC has taken action against a number of crypto companies including Binance and Coinbase, arguing that they should have registered as securities trading platforms under existing rules, and that certain tokens they’ve listed should have been registered as securities.

That U.S. approach may have met a setback last week with a ruling that found doesn’t necessarily fall under the current, century-old securities laws.

France has positioned itself as a crypto hub, and companies such as have registered under its existing crypto law known as PACTE, which is administered by the AMF. On Tuesday, the AMF awarded its first ever crypto license to , the financial-technology arm of the bank Societe Generale, a still more demanding process that already puts Forge largely in line with MiCA.

Being regulated comes with ups and downs – as Binance found recently, when it was raided by the Paris public prosecutor for “aggravated money laundering.” Binance has said it’s cooperating with investigators, and the incident doesn’t seem to have dimmed its enthusiasm for the country.

There’s “no reason” to leave France because of that probe, Binance France’s Executive Director for Legal Stéphanie Cabossioras told the conference, adding that recent events were just part of adapting to life as a traditional finance-style regulated entity. “There are little surprises … but it will become day-to-day life.”

While entrepreneurs in France may complain of high taxes, employment restrictions, and a paucity of investment available via venture capital, the country also offers bonuses beyond regulatory certainty, says the founder of one of the country’s crypto success stories, Ledger.

“Why is Ledger in France? Its foundational technology is the smart card,” asked Éric Larchevêque, Ledger’s former chief executive officer, of the chip-based hardware. “It’s a French innovation, a technology really mastered in France… but not at all in the U.S.”

Now, France is hoping to build on its regulatory success by legislating for a new regime for Web3-style games involving monetizable digital objects – tradable merchandise that gives rights within the game and whose value can be increased by playing more – known by its French acronym of JONUM.

If lawmakers agree a framework in the fall, there could be a “text by the end of the year,”

Isabelle Falque Pierrotin, chair of France’s National Gambling Authority (ANJ) told the event – adding that her preference was for legislation to merely set high-level objectives, such as protecting children, allowing her to negotiate details with the sector.

In May, French Web3 company Sorare, , announced changes to its NFT soccer game for the domestic market – though the ANJ only intended these as a short-term fix pending .

If enacted, some believe those new gaming laws could make a real difference.

“What is currently being foreseen, the last versions of the regime that were discussed in the Senate a few weeks ago, show a true will and a true possibility of positioning France as the real pioneer and leader on this topic,” said Matthieu Lucchesi, an innovation and fintech specialist at law firm Gide255, adding that the law needed to be “well-calibrated” in order to be appealing.

Some quotations have been translated from French.

Edited by Sandali Handagama.