France’s warm welcome to the controversial Chinese-owned cryptographic exchange Binance demonstrates greater European openness to crypto, supported by the European Commission’s innovative proposals for a cryptographic regulatory framework;
On 5 May 2022, Binance announced that the French financial regulator Autorité des Marchés Financiers (AMF) had granted it the registration of Digital Asset Service Provider (DASP) with the approval of the Autorité de Contrôle Prudentiel et de Résolution, the independent authority of the country. supervision of banks and insurance companies. The license to operate in France represents Binance’s first DASP in Europe and marks a turning point for the company, which was previously banned by the US and UK financial services authorities from operating in its markets.
The French government under Emmanuel Macron is optimistic about cryptography, according to Oliver Yates, founder and CEO of the Paris-based wholesale crypto investor platform SheeldMarket. The MFA is super optimistic even though the banking body is by definition less optimistic, he says, adding: “What the government says publicly does not mean that these two bodies continue. Especially on the banking side.”
The fragmented cryptographic regulation of Europe
There are very different cryptographic regulatory regimes across Europe, but significant harmonization of these regulations is about to take place across the EU, according to Caroline Malcolm, head of international public policy and research at blockchain analysis firm Chainalysis. “Harmonization in a large geographical area like the EU could really set the whole sector in motion,” he says.
In 2020, the EU proposed the Markets in Crypto-assets (MiCA) regulation, which is a legal framework for cryptocurrencies that is not yet covered by existing financial services legislation. It is hoped that, by filling the regulatory gap, the foundations will be laid for the European cryptocurrency market to lead the world and become its center of global gravity. MiCA includes provisions for the protection of consumers and investors, addresses the risks of financial stability and monetary policy, as well as measures against market manipulation, money laundering, terrorist financing and criminal activity.
On 14 March 2020, the European Parliament adopted its negotiating position on MiCA. It was considered a great victory for cryptocurrency as parliament did not ban proof-of-work (POW) digital currencies, those that depend on mining and are under control for their energy consumption. Many see the omission of the specific language banning POW in the draft as a tacit adoption of Bitcoin and cryptocurrencies in general. Given that legislation is still in the process of being negotiated, it is still too early to know what environmental sustainability standards the regulatory framework will impose.
This is a game changer for crypto players who want to be in Europe, says Malcolm. With its European headquarters in Paris, under the new framework, Binance and any other encryption company for the case would not have to apply for multiple licenses in different member states across Europe. “Companies could operate in any European country and know that the rules apply,” says Malcolm.
EE. UU. and the United Kingdom lag behind Europe in terms of cryptographic regulation
In contrast, the United States has no imminent provision for a full federal regime of cryptographic regulation. President Joe Biden issued an executive order in March 2022 to ensure the responsible development of digital assets. He wants the government to look at the risks and benefits of cryptocurrencies and how to maintain U.S. cryptocurrency competitiveness, as well as explore the establishment of a national central bank digital currency. The order calls on federal agencies to take a unified approach to regulating digital assets, but there are discussions about which regulator is responsible: whether the Securities and Exchange Commission or the Commodity Futures Trading Commission should take over digital assets . On the contrary, the comprehensive European measures that the European Parliament is going through will be the most significant for the size of its market.
Some claim that the US UU. they have so far exercised defensive regulatory powers over cryptography. In 2019, Binance was banned from operating in the United States, and in May 2021, Bloomberg News reported that Binance was under investigation by the U.S. Department of Justice and the Internal Revenue Service for money laundering and tax evasion.
In the UK, the government launched plans in April 2022 to turn the country into a global cryptographic technology hub, but this came after the UK Financial Services Authority denied Binance a license to operate within its borders. In June 2021, the UK Financial Conduct Authority (FCA) said Binance’s UK entity, Binance Markets, may not conduct regulated activities in the UK “with immediate effect”. The FCA has also issued a warning to consumers about the wider Binance group.