French Market Regulators Crack Down on Cryptocurrency

The emergence of cryptocurrency and blockchain poses questions for financial regulators around the world. Regulators are struggling to understand both where cryptocurrency fits within their regulatory framework and how to set up parameters for transparency and investor integrity. (Bob Pisani, CNBC). Recently, American regulators increased scrutiny for broker-dealers working with cryptocurrency. (Benjamin Bain, Bloomberg). Financial powers in other countries are also responding individually to the crypto-movement, and France exemplifies a recent response.

On September 21, 2018, French stock market regulator Autorite des Marches Financiers (“AMF”) blacklisted twenty-one new investment websites, many of which are related to cryptocurrency. (Marie Huillet, Cointelegraph). The AMF characterized the new websites as “untheorized websites” offering “atypical investment.” (Marie Huillet, Cointelegraph). These new websites are additions to an existing blacklist, which the AMF notes is not comprehensive.

The desire to protect investors from advertisements promoting high investor returns in cryptocurrency is what drives blacklisting these websites. (Marie Huillet, Cointelegraph). France, and other regulators in Europe, ramped up efforts to warn consumer’s about fraudulent actors in cryptocurrency. Belgian market watchdog, Financial Services and Markets Authority (“FSMA”), also recently added twenty-eight websites to its cryptocurrency fraud blacklist. (Marie Huillet, Cointelegraph, Belgium). Despite prior warnings, the FSMA continued to receive fraud complaints from consumers lured into the cryptocurrency craze. (Marie Huillet, Cointelegraph, Belgium).

The new additions the French blacklist comes on the heels of AMF receiving new authority to grant licenses to companies offering initial coin offerings (“ICO”s). (Marie Huillet, Cointelegraph). The French Government hopes this new authority will provide a workable framework for ICO’s in France and spur investment from around the world. Under the new law, companies must apply for a license from the AMF. The license will provide detailed information about the issuer prior to any token issuance. (Ana Berman, Cointelegraph).

France’s efforts to help investors avoid cryptocurrency fraud, while attempting to create a framework for regulation of this new cryptocurrency financial market, exhibits a growing trend around Europe and the world. A Belgian think tank recently released a report calling for unified legislation across the European Union on cryptocurrency. (Ana Berman, Cointelegraph). In September, European Parliament members met with blockchain experts to discuss future ICO regulation. (Helen Partz, Cointelegraph). As regulation develops, the eyes of the crypto industry will look to financial regulators around the world to understand how they can operate within these emerging landscapes.