What Promise Is Every Presidential Candidate Keeping About Crypto?

As France prepares for a presidential election on April 24 in a run-off, political pundits around the world are placing their bets. Up for election are centrist incumbent Emmanuel Macron and right-wing populist Marine Le Pen. Much of the political debate this time round revolves around the economy, but there’s an indispensable part of it that’s largely missing from candidates’ election agendas: digital assets. While both have a record of public statements on crypto-related matters, neither Macron nor Le Pen appear to be sparking any significant policy shift regarding the French digital economy.

state of the art

Despite the current government’s remarkable efforts to integrate the IT industry, France is still not a particularly technology-friendly country in many respects. For years, its authorities have been at the forefront of the European regulatory cause, fighting the tax “optimization” practices of the United States’ tech giants such as B. the opening of European branches in more relaxed jurisdictions such as Ireland and Luxembourg.

In terms of regulation, the country does not have a specific regime for crypto, but the overall regulatory climate is pretty harsh. The key piece of legislation regulating the industry is the 2019 Action Plan for Business Growth and Business Transformation, or PACTE. It obliges all crypto firms in France (legally defined as digital asset service providers) to register with the Financial Markets Authority (AMF) and comply with the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) requirements of the European Union’s Fifth Anti-Money Laundering Directive.

Perhaps the biggest problem for the crypto industry is the strict Know Your Customer (KYC) policy, which does not set a transaction value threshold for invoking reporting rules. In other words, every crypto transaction worth 1 euro or more requires a full KYC procedure, including disclosure of the full names, addresses and contact details of the parties.

On the plus side, disciplined industry players have the chance to get a special license from the AMF that allows them to apply for French bank accounts. As Thibault Verbiest, a Paris-based partner at law firm Metalaw, told Cointelegraph, French banks are reluctant to open bank accounts for crypto companies.

Meanwhile, the French central bank is actively exploring a potential central bank digital currency (CBDC).

French regulatory activism

French officials play an active role in the international regulatory process. In February 2021, Robert Ophèle, Chairman of the AMF, proposed that all power and responsibility for crypto regulation be placed in the hands of the European Securities and Markets Authority. He also emphasized the crucial role of blockchain technology in the future of the European economy. The proposal was later repeated by the French government.

Four months later, in June 2021, Bank of France Governor François Villeroy de Galhau doubled down on calls for a pan-European crypto regulatory framework to be in place as soon as possible. Unlike Ophèle, de Galhaus’s point of view sounded far less friendly.

He stressed the danger of crypto eroding “monetary sovereignty” and estimated that Europe has only a year or two to solve the problem. EU regulators have responded with some key initiatives, such as intensifying work on the regulatory framework for the crypto-asset market and the recent overhaul of the Funds Transfer Regulation with tighter scrutiny of individuals’ transactions.

Still, the French government has made efforts to support the crypto industry domestically. “France has placed itself at the forefront of crypto innovation, at least as far as the adoption of the regulatory framework and some partnerships with key industry players and support by funding new projects,” noted Verbiest.

In November 2021, Binance CEO Changpeng “CZ” Zhao, alongside Cédric O, French Secretary of State for the Digital Economy, announced a partnership with local financial technology association France FinTech, pledging $115 million to develop the European cryptography industry.

Careful consideration vs. disinterested distrust

According to a recent study, 4% of French adults believe cryptocurrencies are an issue that will determine their vote in the presidential elections. This modest number is reflected in the attention both candidates are devoting to cryptography.

Macron, himself a former banker, has taken a cautious stance, largely reiterating calls for more regulation. At the Davos International Forum in 2018, he called Bitcoin (BTC) and digital currencies “the most aggressive players in financial markets […] who can cause financial crises and deregulate systems”, alongside the shadow banking system.

As Verbiest recalled, Macron was trained to become a senior official at the French Treasury. It is therefore natural for him to put the concerns of the European banking sector ahead of the interests of the digital economy:

“Crypto is disrupting banking, and France has a very powerful banking sector. In addition, the European Union and the euro require France to find a consensus on monetary and financial issues with the other European member states.”

Still, Macron’s first term brought at least two notable individuals into the halls of power who openly support the crypto industry. Already 2019, O promised support “all crypto-asset and blockchain players” by creating “comprehensive and credible conditions” for growth. A few years later, however, O justified the tightening of AML/CFT and dismissed crypto entrepreneurs’ reservations about the policy, saying he didn’t think France was “missing the blockchain technology train.”

Pierre Person, a 33-year-old MP in France, was one of the co-founders of the youth organization Les Jeunes avec Macron and the “liberal left” think tank in support of Macron’s policies. La Gauche Libre. In 2019, he submitted a pro-business blockchain report to French lawmakers and has since advocated the creation of the European stablecoin.

More recently, however, Person resigned from the leadership position in Macron’s La République En Marche movement, sharing his disillusionment with the government’s actions regarding crypto.

Macron’s candidate, leader of the family nationalist National Rally party, Le Pen, has always preferred to talk about immigration threats rather than the digital economy. However, she has her own record of a reversal towards crypto in public speaking.

In 2016, before the last election, she called for Bitcoin to be banned, presenting it (and digital currencies in general) as an idea that came from “Wall Street’s powerful business lobby.” Since then, Le Pen has softened the Wall Street narrative, confining himself to supporting strict regulation of crypto assets. Unlike Macron’s entourage, she or her allies have yet to say a good word about cryptocurrency or blockchain technology in general.

No to the self-regulated sector, yes to the pan-European approach

Regardless of the outcome of Sunday’s vote, France is likely to stick with the pan-European regulatory process that the country itself has been a part of for years. Speaking to Cointelegraph, Stephen Stonberg, CEO of crypto exchange Bittrex Global, commented:

“France is unlikely to have any major problems with the upcoming EU crypto asset markets [MiCA] Regulation, as French regulators will be aware that a pan-European approach is needed to adequately oversee the industry. In fact, French regulators are more likely to wait for MiCA before making any major moves or commitments.”

Should Macron prevail, his government is likely to maintain its current course – a combination of cautiously crypto-friendly (focusing on blockchains, not currencies) rhetoric and tough but not restrictive policies on digital assets, in full compliance with the FATF and EU framework .

A great summary of Macron’s ambiguous relationship with crypto is his interview he gave a few days before the second round of voting. When answering questions about digital assets and Web3, the incumbent once managed to evade the word “crypto” while uttering familiar phrases about his country’s mission to lead the digital economy and support innovation. Perhaps the most important words are:

“I don’t believe in a self-regulated financial sector. That would be neither sustainable nor democratic. It is up to the public authorities to define the right conditions for the sector to develop with confidence while encouraging innovation.”

There is always a possibility of a blatant anti-EU stance with Le Pen, but this is not good news for the crypto industry. The candidate, who mixes left and right sentiments in her populist cocktail, has given no indication that she might be particularly interested in the digital economy.