Head of International Corporate Law and Fintech Practice
Expert in fintech, crypto, and international corporate law with over 20 years of experience. Specializes in crypto licensing (VASP/CASP), iGaming business support, and international structuring, asset protection, and OSINT analytics for risk assessment and due diligence.
Licensing of cryptocurrency activities in France
The services mentioned in the previous article can be provided according to one of two regulatory regimes: mandatory registration or optional (optional) license, and the optional license provides more guarantees for investors.
Mandatory registration is necessary for the provision of one or all types of services specified in points 1-4.
To register a company as a DASP, the regulator conducts due diligence on:
- the good standing and competence of the applicant’s directors and beneficial owners, including an assessment of the relevance of their education and professional experience to the services to be provided by the organization, as well as a criminal background check that they may have;
- policies and procedures aimed at combating money laundering and terrorist financing.
An optional (facultative) license can be used instead of mandatory registration for the provision of services specified in points 1-4, as well as for the provision of services specified in points 5-9.
To receive an optional license, the applicant must not only meet the requirements necessary to obtain mandatory registration but also have the following:
- professional liability insurance or minimum equity in specified amounts;
- at least one active director;
- human and technical resources;
- stable IT system;
- internal control system;
- complaint handling procedures;
- conflict of interest prevention procedures and policies.
The company must also be registered with the French Prudential Supervision and Resolution Authority (ACPR).
The optional license allows its holders to engage in marketing activities in France, which is prohibited by registered DASPs.
From July 1, 2023, a new enhanced registration regime was introduced, which will become mandatory from January 1, 2024.
The regulatory framework was improved by strengthening the supervisory and enforcement powers of the AMF.
The regulator will be able to take precautionary measures if it believes that a DASP may become insolvent, and may also suspend its registration if its activities are deemed to be a threat to the stability of the digital asset market.
As part of the enhanced registration regime, companies are required to ensure the following:
- compliance with the requirements of legislation in the field of combating money laundering and financing of terrorism (AML/CFT);
- establishing a sustainable and secure IT infrastructure, adopting a detailed cyber security policy, and submitting an audit report from a certified cyber security consultant (which must be based in France);
- implementation of adequate security and internal control systems;
- use of clients’ assets only after prior agreement with them;
- adoption and implementation of additional procedures related to conflicts of interest, complaint handling, internal control, incident reporting, outsourcing, and pricing policy disclosure;
- adoption of special policies regarding the storage and separation of DASP assets from user assets;
- including mandatory information and disclaimers in the Terms and Conditions and marketing content, providing clear and accurate information that does not mislead customers.
Licensed DASPs must have either adequate reserve capital or a professional indemnity insurance policy providing coverage of €400,000 per claim and €800,000 per insurance year.
The requirements of the enhanced DASP licensing regime are largely similar to the MiCA Regulation.
Thus, obtaining a strengthened license should speed up the process of obtaining a MiCA license and the corresponding European passport, which will allow companies to provide their services in all EU member states with a single license.
According to the MiCA Regulation, all CASPs operating in the European market will be required to apply for a CASP license. They will have an 18-month transition period ending in July 2026.
During this period, registered or licensed DASPs can legally continue to offer their services, but without a European passport.
If you want to learn more about the procedure and nuances of authorization of cryptocurrency companies from the state regulator or start your own business in France, contact the company “Prihodko and Partners”.
Our experts will analyze your needs, offer individual solutions, and help legalize your cryptocurrency business.
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