France is considering blocking cryptocurrency firms from operating locally under licenses obtained in other European Union countries. The move stems from worries over enforcement gaps in the EU’s crypto regulatory regime, the Markets in Crypto-Assets Regulation (MiCA), which is the first comprehensive legal framework for crypto in the bloc.
The country’s securities regulator, the Autorité des Marchés Financiers (AMF), told Reuters that it is scrutinizing the risk that some crypto firms may seek licenses in more lenient EU jurisdictions, effectively using them as a “weak link” to bypass stricter standards in France.
Potential ban seems as very complex and compared it to an atomic weapon for the market, emphasizing the gravity of restricting EU passporting rights.
How EU passporting works under MiCA
MiCA, which took effect for crypto-asset service providers in December 2024, allows firms authorized in one EU member state to operate across the 27-nation bloc through a passporting mechanism. France’s warning underscores concerns that inconsistent regulatory enforcement among member states could undermine MiCA’s effectiveness.
Barbat-Layani noted that some firms are actively seeking licenses in jurisdictions with lower compliance requirements, potentially jeopardizing investor protection and market integrity.
Push for centralized EU supervision
France is not alone in its concerns. Alongside Austria and Italy, France has called for the European Securities and Markets Authority (ESMA) to take over the supervision of major crypto firms. This proposal includes:
- Stricter rules for crypto activities outside the EU
- Enhanced cybersecurity oversight
- Revisions to how new token offerings are regulated
The three countries argue that centralized EU supervision could close enforcement gaps and ensure consistent application of MiCA standards.
Lessons from Malta’s licensing regime
The debate follows scrutiny of Malta’s crypto licensing practices, which have faced growing criticism. In July, ESMA’s peer review of the Malta Financial Services Authority (MFSA) found that it only partially met expectations in supervising a crypto service provider.
ESMA’s ad hoc Peer Review Committee (PRC) recommended that the MFSA:
- Assess unresolved issues at the authorization stage
- Monitor the growth of authorization applications
- Adjust supervisory practices promptly to address regulatory gaps
These findings highlight the risks of uneven regulatory enforcement across the EU, which France and its partners are seeking to address through either stricter national controls or ESMA-led oversight.