Mandatory Registration for Crypto Exchange Services
An actor may be considered a Digital Asset Service Provider (DASP) if it provides at least one of the following digital asset services, as mentioned in Article L. 54-10-2 of the French Monetary and Financial Code:
- custody of digital assets on behalf of a client ;
- the service of buying or selling digital assets for legal tender ;
- trading of digital assets against other digital assets ;
- the reception and transmission of orders for digital assets, meaning the act of receiving and transmitting buy or sell orders for digital assets on behalf of a client ;
- the management of digital asset portfolios, meaning the act of managing, on a discretionary, client-by-client basis, portfolios that include one or more digital assets under a mandate given by a client ;
- advice to investors in digital assets, which means giving personalised recommendations to a third party, either at their request or on the initiative of the service provider providing the advice, concerning one or more digital assets ;
- digital asset underwriting, defined as the act of purchasing digital assets directly from a digital asset issuer, with a view to subsequently selling them ;
- the guaranteed placement of digital assets, which consists in searching for buyers on behalf of a digital asset issuer and guaranteeing them a minimum amount of purchases by undertaking to buy the digital assets not placed ;
- the non-guaranteed placement of digital assets, meaning the act of searching for buyers on behalf of a digital asset issuer without guaranteeing them an amount of purchases ;
- the operation of a trading platform for digital assets. This concerns the management of one or more digital asset trading platforms, within which multiple buying and selling interests expressed by third parties for digital assets in exchange for other digital assets or a currency that is legal tender can interact in such a way as to result in the conclusion of contracts.
In France, mandatory registration with the Autorité des Marchés Financiers (AMF) is required for companies providing the following digital asset services:
- Digital asset custody ;
- Buying or selling digital assets in a currency that is legal tender ;
- Trading of digital assets against other digital assets ;
- Operation of a trading platform for digital assets.
The AMF, in conjunction with the Autorité de Contrôle Prudentiel et de Résolution (ACPR), checks the good reputation and competence of the managers and beneficial owners of the company and seeks clearance from the ACPR.
In all cases, the AMF checks the company’s compliance with Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regulations.
Compiling the Registration Application
To register as a crypto exchange in France, companies must fill out multiple forms that specify the required information and documents, such as:
- AMF DASP Form ;
- AMF DASP Executive Manager Form ;
- AMF DASP Significant Shareholders Form ;
- AMF DASP Programme of Operations.
The application should be submitted to the AMF and should contain a detailed narrative description of the digital asset services for which the company is seeking registration. The AMF examines the application and may request additional information or hold discussions with the company to ensure that it meets all the necessary requirements. Having the support of experienced lawyers can greatly increase the chances of success in obtaining a crypto exchange license in France, as we can provide guidance on navigating the complex regulatory environment and ensure all requirements are met.
Crypto exchange licence requirements
The requirements for obtaining a license from the AMF include the following conditions for financial resources and organization:
- Having professional indemnity insurance or a minimum amount of own funds ;
- Having at least one executive manager ;
- Having sufficient human and technical resources ;
- Having resilient IT systems ;
- Having an internal control system ;
- Having a claims handling procedure ;
- Having an organization that enables the avoidance of conflicts of interest ;
- Having procedures for the prevention of money laundering and the financing of terrorism.
In terms of conduct of business, the licensed DASP must:
- Communicate clear information to clients ;
- Sign a contract with their client ;
- Comply with specific requirements for the services provided.
Taxation of Crypto Exchanges in France
The taxation of crypto exchanges in France depends on the type of company that is created. Companies operating as a SAS (Société par Actions Simplifiée) or SARL (Société à responsabilité limitée) which is the french Limited Liability Company are subject to the standard corporate tax rate, which is currently at a rate of 15% up to 25%. In addition, companies operating as a SAS or SARL are also subject to 20% value-added tax (VAT) on their services.
It is important to note that the taxation on crypto assets in France is subject to change, so it is advisable to consult with a lawyer to ensure that the company is in compliance with the latest regulations and requirements. Additionally, international tax laws may also apply to crypto exchanges operating in France, particularly if they have operations or clients in other countries.
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Published on: March 10, 2023
Editor : Elias BOURRAN, Attorney at Law (Paris Bar, France) and PhD in Law.