France Challenges EU Crypto Passporting Under MiCA, Raising Regulatory Uncertainty

France Challenges EU Crypto Passporting Under MiCA

France’s financial regulator, the Autorité des Marchés Financiers (AMF), is contemplating measures to prevent cryptocurrency companies licensed in other European Union (EU) member states from operating within France. This move, reported by Reuters, directly challenges the EU’s Markets in Crypto-Assets Regulation (MiCA), which was implemented less than a year ago to establish a unified regulatory framework across the 27-nation bloc.

MiCA was designed to eliminate regulatory arbitrage by allowing crypto firms to operate across the EU under a single license issued by any member state. The AMF’s concerns center on firms exploiting licenses from jurisdictions with more lenient oversight to conduct business in France, potentially undermining investor protection and market integrity.

Legal and Regulatory Tensions

Industry experts express divergent views on the legal viability of France’s position. Marina Markezic, executive director of the European Crypto Initiative (EUCI), acknowledges that while blocking passporting is technically possible, it introduces significant legal complexities and threatens the harmonization MiCA promises.

“MiCA was designed to create one harmonised framework and give firms access to a single regulated market across the EU. That promise is now under pressure,” Markezic noted. She further highlighted growing disagreements among national authorities regarding key supervisory issues under MiCA.

Meanwhile, Edwin Mata, lawyer and CEO of asset tokenization platform Brickken, argues that the AMF’s threat lacks legal foundation under MiCA, which is a directly applicable EU regulation rather than a directive. He states, “Legally, the AMF cannot block a duly MiCA-licensed entity from operating in France. The AMF can monitor conduct, raise supervisory concerns, and escalate cases to ESMA, but it cannot impose unilateral barriers.” Mata emphasized that the AMF’s messaging serves more as a warning to scrutinize whether firms are misclassifying products that should fall under the Markets in Financial Instruments Directive II (MiFID II), not an outright ban.

Calls for ESMA to Assume Crypto Supervision

France has joined Austria and Italy in advocating for the European Securities and Markets Authority (ESMA) to take over direct supervision of major crypto-asset service providers. This call, detailed in a recent position paper obtained by Reuters, reflects concerns about inconsistent national enforcement and the need for centralized oversight to ensure regulatory coherence.

However, implementing such a supervisory shift would likely require legislative amendments to MiCA, potentially reopening political negotiations and extending uncertainty for the crypto industry. Cointelegraph reached out to ESMA for comment but received no response by publication time.

Implications for the Crypto Industry

The AMF’s stance underscores the challenges of enforcing a unified regulatory regime in a diverse political and legal landscape. While MiCA aims to foster a single market for crypto-asset services, national regulators’ differing interpretations and enforcement priorities risk fragmenting the market and complicating compliance for firms.

Key risks include potential jurisdictional disputes, delays in regulatory clarity, and increased compliance costs for crypto companies operating across multiple EU countries. Market participants and policymakers will closely monitor developments around ESMA’s role and any legislative changes to MiCA, which could significantly influence the European crypto ecosystem’s evolution.