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France Passes Bill To Regulate Cryptocurrency, ICO

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The French parliament adopted a financial sector bill that brings cryptocurrency service providers and Initial Coin Offering (ICO) under regulation.

The French National Assembly adopted the PACTE draft Bill (Action Plan for Business Growth and Transformation) after its final reading last week. Once enacted, the law will establish a framework for fundraising via the issuance of virtual tokens and digital assets services providers.

Until now, fundraising through the issuance of tokens not classified as financial instruments was not subject to any specific rules.

Under the PACTE Law, those project initiators who wish to launch an ICO will be issued an optional visa by the Autorité des Marchés Financiers, or Financial Markets Authority, if they meet certain requirements.

These requirements are designed to provide investors with better information about the prospective ICO issuer, and to ensure protection.

The visa remains optional and the raising of funds without AMF visa will continue to be legal in France. However, issuers who have not received the AMF visa will not be able to use general solicitation.

The new legislation contains a provision to issue optional license for digital assets services providers, who will be placed under the supervision of the AMF if they wish.

ICOs that do not have visa and unlicensed service providers will be prohibited from solicitation, patronage and sponsorship activities.

AMF will publish the list of ICOs that have received its visa, and a "blacklist" of ICOs and digital assets services providers who do not comply with the regulations.

It will block access to fraudulent websites offering services in digital assets.

Licensed service providers will be subject to a set of basic rules common to all services, such as insurance or equity, internal control procedures, resilient IT system and transparent pricing policy.

The law makes it clear that service providers who wish to provide digital assets custody services to third parties or to purchase/sell digital assets in exchange for legal tender are subject to mandatory registration with the AMF.

The AMF will have the powers to oversee the ICOs that have received its visa and to supervise licensed service providers. In the event of non-compliance with the rules, the AMF may hand down sanctions against ICO issuers and licensed service providers.

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