French senator proposes tighter crypto regulations after FTX collapse

The recent bankruptcy of cryptocurrency exchange FTX has prompted a French senator to propose tighter regulations in the sector. Hervé Maurey, a member of the finance commission, plans to amend existing legislation to eliminate the permit for registered cryptocurrency companies to conduct domestic business without a full regulatory license until 2026. This comes as pressure builds on France to fill gaps in its crypto regulations ahead of the European Union's Markets in Crypto Assets (MiCA) legislation coming into effect in 2024.

Currently, France offers a degree of regulatory leniency in order to attract crypto companies. Digital Asset Service Providers (DASPs) in the country are subject to mandatory registration and AML/CFT compliance, but the registration does not mandate a license. All 50 registered companies in France are currently operating without a license.

France is considered one of the most "business-friendly" nations for cryptocurrency and is among the top 20 crypto economies in the world. In October, the French financial regulator approved SG Forge, one of the nation's oldest banks, to offer cryptocurrency services. Binance also obtained registration in France this year.

However, the collapse of FTX has put the spotlight on the need for stricter regulations. The exchange's bankruptcy has had a ripple effect, destroying other businesses through direct or indirect exposure to the company. Investors have lost billions of dollars, prompting regulators to consider tighter rules.

The full implementation of MiCA legislation is set to take place in 2024, and the pressure is on France to ensure that its regulations are in line with the EU's framework. Maurey's proposal is seen as a step towards achieving this goal and protecting investors from future collapses.

Despite the calls for stricter regulations, some industry experts have warned against overregulation. They argue that excessive rules could stifle innovation and harm the growth of the cryptocurrency sector. It remains to be seen how the French government will balance these competing interests as it looks to bolster its crypto regulations.