France has announced new rules that are specific to digital coins. Set to take effect later this month, the rules will allow crypto-related firms to get approval from the regulator by voluntarily abiding by standards set for consumer protection and finances, along with paying their taxes in the country.
This is the first example of a prominent nation setting out rules for crypto-related companies. Speaking on the matter, executive director (legal) at the Financial Markets Authority, Anne Marechal, said that this is a precursor, and there will be a “legal, tax and regulatory framework.” The financial watchdog is in discussions with several candidates for initial coin offerings, cryptocurrency exchanges, and funds, she added.
Being an emerging technology, many countries still haven’t formed any specific rules for cryptocurrencies. Countries usually apply the financial regulations in use to crypto businesses as well.
Besides being an emerging technology, cryptocurrencies have also been in the news for consumer protection and security issues. In 2019 alone, there have been multiple instances of crypto exchanges getting hacked. Besides security breaches, the privacy of consumers is also a concern. A recent example of this is the concerns regarding Facebook’s launch of its digital coin. Many major names, including MasterCard and PayPal, are founding members of Facebook’s Libra project, with the Libra digital coin.
While Facebook is marketing Libra as a convenient, fast, and secure solution for crypto users, the project has recently come under scrutiny in the U.S. Senate. The Senate Banking committee is quizzing Facebook about the intentions of the project, and some senators have shown their lack of trust in Facebook because of the company’s history.
G7 president France is launching a task force that will have the job of finding how central banks can regulate cryptocurrencies like Libra. Preliminary report on the issue will be delivered this week in the G7 finance ministers conference in Paris.
France has been interested in regulating cryptocurrencies for a while now. Last year, Paris proposed rules to accommodate cryptocurrency businesses in France. This proposal came when initial coin offerings were everywhere in the market. The trend has now changed to initial exchange offerings.
Expecting regulations to bring clarity and improve perception of cryptocurrencies, some companies are supporting the move. Frederic Montagnon, a founder of the cryptocurrency platform LGO, said that regulation is good because it helps you keep at bay any adverse frameworks that maybe imposed on businesses.