It’s time to take stock! – As expected, MPs Éric Woerth and stone person presented an information report to the National Assembly on December 1, 2021 on the implementation of the recommendations relating to the regulation of crypto assets, formulated by the information mission. This report aims to summarize the recommendations met and not met with the entry into force of the PACTE law in 2019. It also makes it possible to point out the concepts that still need to be regulated, such as that of non-fungible tokens (NFT). Finally, he recalls the objectives that must be achieved in order to maintain France’s competitiveness in terms of crypto assets.
State of play of the implementation of the recommendations of the fact-finding mission relating to crypto-assets
The information report reported by the deputy Eric Woerth takes up the recommendations made in January 2019 by the fact-finding mission. The latter had been created by the Finance Committee, he had the presidency while Pierre Person was the rapporteur. Almost three years after these recommendations, they take stock of what has been done and still needs to be done to continue to “shake” the legislator when it comes to active crypto.
In total on the 27 recommendations and proposals made by the fact-finding mission, 11 were satisfied and 5 partially or one 60% rate.
First of all, one of the first recommendations of the fact-finding mission related to the definition of digital assets and related activities, giving priority to the creation of a adapted definition rather than siloing them within an existing legal framework.
This recommendation has been satisfied by the PACTE law of 2019 which introduced a definition of digital shares in the Monetary and Financial Code (CMF). Additionally, it also introduced the definition of five categories services on digital assets.
Recommendations relating to taxation
However, with respect to tax proposals only 4 of them were fully satisfied, and a partially on the 13 that had been formulated. Compared to the other proposals, this is little! And yet the emphasis has long been placed on certain recommendations that have still not been met. In this respect, the proposal aimed at increase the annual allowance on disposals in crypto assets of €305 to €3000. Another proposal reiterated several times, but which has not never been consecrated by the legislator is the one allowing to consider that only repatriation to a bank account would be a generating event tax on the capital gain on disposal.
Furthermore, with regard to companies, the proposal to align the tax regime of the attribution of free tokens on the one applicable to allocation of free shares doesn’t she too never been satisfied.
Finally, the report notes that the relationship between the banking sector and that of digital assets “still struggling to normalize”. Therefore on the tax proposals, as well as concerning the reception of digital assets by the banks the balance sheet is mixed.
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Recommendations for Digital Asset Service Providers (DASPs)
Regarding the status of the PSAN, one of the proposals aimed to clarify the definition of “digital asset services” and those of asset conservation. This, like the one proposing to set up a differentiated visa depending on the type of activity of the PSANs, has been satisfied.
In addition, the fact-finding mission had recommended reduce the study of applicants’ files to PSAN status. According to the report, this instruction and the procedure for registering PSANs remain too long. Besides, the giantBinance Exchange is currently having the painful experience.
The objectives to be achieved to preserve the economic future of France in the face of crypto assets
First of all, one of the objectives of the proposals still to be achieved concerns the French training to blockchain technologies. It was indeed recommended to include modules of blockchain training in L’secondary and higher education. This proposal aims to train the crypto entrepreneurs of tomorrow which will ensure a certain competitiveness of France in the face of digital assets.
However, the report notes that the proposal to create an association bringing together the main players in the crypto active sector in France has been satisfied. Indeed, since 2020 these professionals have come together in theAssociation for the Development of Digital Assets (ADAN). Initially, this association had only about ten members, whereas today nearly 70 companies in the cryptosphere are part of.
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Regulatory issues raised by crypto assets
In the second part of this report, these are new challenges facing the digital asset market which are addressed. The two deputies start from the observation that the pandemic of the COVID-19 had no adverse effect on this market, which was on the contrary the field of increasingly innovative projects. They then present the case of salvador, which as a reminder is the first country to have adopted the Bitcoin (BTC) like legal tender since September 2021.
However, this case is still on the fringes and the development of stablecoins as well as central bank digital currencies (MNBC) remain the two major developments. However, especially with regard to stablecoins, the report notes that they suffer from a severe legal vacuum, in the same way as the decentralized finance (DeFi). France and more broadly the European Union (EU) must imperative to lean on these by adopting a rbalanced regulation. Indeed, management should countering systemic risks while preserving their attractiveness.
When the subject of MNBC is mentioned, and more specifically the project ofdigital euro the report states:
“The digital euro project will not be completed for several years: this is a period that seems long compared to the speed with which financial technologies are evolving (…)”.
Thus, according to the fact-finding mission, the urgency seems rather to be in the management of the stablecoins than in the creation of an MNBC. However, the EU and France do not seem to agree. Moreover, none of the amendments proposed for the finance law for 2022 did not concern the treatment of stablecoins.
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