Why foreign DASPs anticipate MiCA in France?

France is one of the European member States with the most DASPs registered. The 95 registered companies include many global players who have chosen Paris as their European hub: Binance, OKX, Circle, BitPanda, Crypto.com or Luno.

The reason behind France’s appeal to the tech sector is due to a combination of political will, a structured crypto industry and an attractive regulatory framework offering a shortcut to the European Market under MiCA.

The benefits of the French DASP license regime to anticipate MiCA 

As of December 30th, 2024, MiCA’s harmonized European framework will replace the national frameworks governing the public offering and admission to trading of tokens, the provision of crypto-asset services, and the prevention of market abuse of crypto-assets. 

To anticipate this date, French Law provides two solutions:

1. 1.   Applying for a mandatory DASP registration, enabling operators to exercise their activity in France under this status, until 30th June 2026;
   2.   Applying for an optional DASP license, offering a long-term solution by giving access to a high level of compliance and a fast-track process initiated by the AMF to convert the DASP license into a CASP one, providing access to the entire European market from early 2025.

In both cases, the application must be submitted as early as possible to give the regulator enough time to process it before MiCA entry into application (December 30th, 2024). The time necessary to obtain these authorizations is difficult to assess, since there is only one licensed operator and no DASP registered under the new regime applicable since July 1st, 2023. However, we expect the procedure to take ~ 6 to 9 months for the registration and ~ 9 to 12 months for the license.

The converging requirements for the DASP registration and license

The regime applicable to the DASP registration and the optional license is quite similar. The main differences lie in the analysis of the applicant’s financial situation and its governance:

• Equity: To be licensed, the DASP must hold a certain level of equity. The minimal level of equity is set at €125K for custodian and exchange platforms;
• Headquarters in France: To be licensed, the provider must be established in France through the establishment of a subsidiary or a branch. To be registered, DASPs from third countries can be established either in France or in another Member State of the EU or in a State party to the Agreement on the EEA.
• Substance in France:
  • Effective management: to be licensed, the effective management of the French establishment must be based in France, implying residency. Regarding the registration, there is no requirement to be based in France but the location in the EU can be expected by the AMF and is highly recommended to anticipate MiCA. 
  • Compliance team: to be licensed, (i) the person responsible for implementing the AML/CFT and assets freeze systems (ii) a Tracfin reporting party and correspondent and (iii), if necessary, a person responsible for the control functions of the AML/CFT system and the assets freeze should be located in France. Regarding the registration, the only requirement concerns the functions of the Tracfin reporting party and correspondance that must be exerciced in France if they are outsourced to another entity of the applicant’s group; this is the condition to outsource this function.
  • Sales and customer support team: to be licensed, the persons responsible for these functions should devote a minimum amount of time to the DASP business in France.

Besides these obligations, the requirements are aligned for both procedures. In particular, applicants must provide a detailed description of their security and internal control systems, demonstrate the reliability of their IT systems in accordance with the AMF’s requirements, have their IT infrastructure audited by a service provider certified “PASSI” by the ANSSI, describe the measures taken to detect, prevent and deal with conflicts of interest, and forward a complaint’s management procedure and a custody policy.

In addition, at least two executive managers should be appointed for both procedures.

Finally, regarding the compliance team, at least two persons are required for both procedures (AML-CFT compliance officer and the Tracfin declarant and correspondent or “MLRO”). Then, the number of employees assigned to AML-CFT compliance should be proportional to the activity. The Compliance officer can be MLRO and/or one the executive manager, depending on the size and internal organization of the company.