France is taking a bold stance on cryptocurrency regulations, warning that it could block companies licensed in other European Union (EU) nations from operating in the country. This move has raised concerns about enforcement gaps under the recently introduced Markets in Crypto-Assets (MiCA) regulation, which allows companies to use licences obtained in one country to operate across the EU. The French regulators argue that this “passporting” system risks creating loopholes as firms gravitate towards jurisdictions with weaker supervisory standards.
France Joins Italy and Austria in Push for ESMA Oversight of Crypto Firms
Marie-Anne Barbat-Layani, head of France’s financial watchdog Autorité des Marchés Financiers (AMF), told Reuters that some companies are engaging in “regulatory shopping” by seeking licences in jurisdictions with looser standards. After coming into effect for crypto-asset service providers in December 2024, MiCA allowed firms approved under one umbrella to “passport” their licences across the EU.
Barbat–Layani further criticised France’s move and said that this action could be equivalent to deploying an ‘atomic weapon’ that could tamper with the passporting mechanism. “We do not exclude the possibility of refusing the EU passport,” she said, adding that the inconsistencies in national oversight could damage investor protection and market stability.
The concern arises as various high-profile exchanges, which include Coinbase (licensed in Luxembourg) and Gemini (licensed in Malta), have already obtained MiCA approvals. However, the French regulators are concerned that the system could be vulnerable due to lighter licensing regimes in countries like Malta.
In July, the European Securities and Markets Authority (ESMA) issued a peer review criticising Malta’s Financial Services Authority for insufficient risk assessments when granting crypto licences.
In a coordinated push, France has joined Italy and Austria in calling for the ESMA, based in Paris, to oversee major crypto firms directly. As per Reuters, a joint position paper was presented, which outlined proposals for shifting supervision away from national regulators. Stricter rules for crypto activities outside the EU, stronger cybersecurity oversight, and a reassessment of how token offerings are approved were a few revisions that the three countries asked MiCA to revise.
The idea of centralised oversight will create mounting pressure to create a level playing field across the bloc. ESMA chair Verena Ross has previously shown support towards pan-EU oversight; however, the proposal faced backlash from several member states who believe in holding regulatory autonomy.
Crypto companies are in a transition phase, as they comply with MiCA regulations and apply for licenses. France is threatening to challenge the legitimacy of foreign-issued licences. This debate could reshape how Europe manages its rapidly growing digital assets market.
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