With the unprecedented and rapid growth of the cryptocurrency market these past two years, it’s no surprise that countries are drafting new regulations designed to not only protect investors but also curb illicit activities. France’s Financial Markets Authority, the Autorité des marchés financiers (AMF), adopted their new Pacte Bill early April 2019 in an attempt to do just this. By establishing a legal framework for digital asset service providers and initial coin offerings (ICOs), the AMF positions itself as France’s domestic regulator of the cryptocurrency industry.
France’s bill implies that ICO issuers may apply for approval from the AMF, after undergoing a rigorous due diligence process of the token, project, and company. Although obtaining a license is optional for ICOs, those who do not comply will be subject to severe operational restrictions, including being “prohibited from solicitation, patronage and sponsorship activities.” The AMF clarified that registration is mandatory for all entities operating within the jurisdiction, stating that “service providers who wish to provide digital asset custody services to third parties or to purchase/sell digital assets in exchange for legal tender are subject to mandatory registration with the AMF.”
As reported by Bitcoin.com, AMF Chairman Robert Ophèle emphasized that the regulatory body acted to help, not hinder, the development of the blockchain industry. Ophèle stated:
“These are common sense rules. This regime will enable us to address this new issue with a proportionate framework that both protects investors and fosters innovation. We believe it will attract the good projects.”
The unchecked ICO boom of the 2017 bull market led to a wave of unscrupulous market behavior, negatively affecting the swaths of retail investors. AMF’s regulatory framework will monitor and safeguard the assets collected during token sales to ensure the protection of investors from fraud. However, the bill will not protect investors from losses.
Once enacted, France will be the first major country to adopt such a law. According to CNBC, the nation is strongly urging the European Union to follow suit in adopting its regulatory framework.
Despite its recent unprecedented growth, the cryptocurrency industry is still very much in its infancy. As new regulatory frameworks continue to develop across multiple governments, however, we will witness an increase in adoption. By curating a clear and concise regulatory framework, governments will enable businesses and individuals to invest and innovate without the fear of being blindsided by a regulatory shift and industry misconduct.
France aims to lead the way for the world’s major countries with a clear national cryptocurrency policy. Will the United States and other Western nations soon follow?
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