France Signals Possible Ban on EU-Passported Crypto Firms Amid Regulatory Gaps

France Considers Blocking EU-Passported Crypto Firms Over Regulatory Concerns

France’s financial markets regulator, the Autorité des Marchés Financiers (AMF), has indicated it may refuse to recognize cryptocurrency companies operating within its borders under licenses granted by other European Union member states. This stance underscores growing apprehension about enforcement inconsistencies under the EU’s Markets in Crypto-Assets Regulation (MiCA), which aims to establish a comprehensive framework for crypto regulation across the bloc.

Marie-Anne Barbat-Layani, AMF chair, told Reuters that France does not rule out the possibility of rejecting the EU passport mechanism provided by MiCA. She characterized such a move as a “very complex” and significant intervention, likening it to an “atomic weapon” in market regulation. The AMF’s concern centers on crypto firms seeking licenses in jurisdictions with less stringent requirements, potentially undermining regulatory standards.

MiCA, effective since December 2024, enables crypto-asset service providers authorized in one EU country to operate across all 27 member states under a unified licensing passport. France’s warning highlights fears that uneven application of MiCA could create loopholes, compromising the framework’s integrity.

Calls for ESMA to Supervise Major Crypto Firms

France has joined Austria and Italy in urging the European Securities and Markets Authority (ESMA), based in Paris, to assume supervisory responsibility for significant crypto companies. According to a position paper reviewed by Reuters, these countries advocate for enhanced centralized oversight to ensure consistent enforcement across the EU.

In addition to proposing ESMA supervision, the three regulators support amendments to MiCA that would impose stricter controls on crypto activities originating outside the EU, bolster cybersecurity requirements, and reassess regulatory approaches to new token offerings.

Scrutiny on Malta’s Crypto Licensing Practices

These developments follow critical assessments of Malta’s crypto regulatory regime. In July, ESMA published a peer review of the Malta Financial Services Authority’s (MFSA) authorization of a crypto service provider, concluding that the MFSA only “partially met expectations.” The review urged the MFSA to address outstanding issues from the authorization process and improve supervisory practices to keep pace with growing authorization applications.

ESMA’s ad hoc Peer Review Committee recommended that Malta intensify monitoring efforts and adjust regulatory oversight promptly to maintain robust standards.

France’s position signals heightened vigilance within the EU to prevent regulatory arbitrage and ensure MiCA’s effectiveness as the bloc’s foundational crypto regulatory framework.