Definition of digital assets in France
The French regulation defines utility tokens as “any intangible asset represented in digital form, representing one or more rights which can be issued, recorded, stored, or transferred using a shared electronic recording device (such as a blockchain), which allows the owner of the asset to be identified, directly or indirectly.” This definition highlights the representation of a right to access a service or technology provided by the issuer.
Cryptocurrencies or Virtual Currencies
Cryptocurrencies, also known as virtual currencies, are defined as “any digital representation of value that is not issued or guaranteed by a central bank or public authority, not necessarily attached to legal tender, and does not have the legal status of money, but is accepted by individuals or entities as a means of exchange and can be transferred, stored, or exchanged electronically.” Examples of cryptocurrencies include Bitcoin or Ethereum. They are considered intangible movable assets by the French courts and may be subject to proprietary rights and legal actions like any other asset.
The classification of stablecoins should be based on a case-by-case analysis. The AMF considers stablecoins, which are not necessarily attached to legal tender, to fall within the definition of digital assets. However, the banking regulator considers that stablecoins, especially those backed by official currency, should be classified as e-money. Further clarification is expected in the European Union’s MiCA regulation.
Non-Fungible Tokens (NFTs)
There is no legal definition or position from the regulators on non-fungible tokens (NFTs). NFTs are generally excluded from the definition of digital assets as they are non-fungible assets that cannot be used as units of account or medium of exchange. They do not give access to a specific service or technology, but only represent an asset or image. However, the AMF has stressed that the classification of NFTs as digital assets depends on their features.
Security tokens represent financial instruments or tokens with similar characteristics. The qualification of a security token is based on the European definition of a financial instrument, including equity securities, debt securities, units in collective investment funds, and financial contracts. The lack of a legal entity (such as a decentralized autonomous organization or informal group) does not prevent a security token from being classified as such in the presence of a de facto company. The AMF has published several analyses on the compatibility of security tokens and security token offerings (STOs) with financial laws, but most primary market financial regulations apply to security tokens. However, the concepts of “settlement” and “delivery” seem incompatible with security tokens, especially if they are listed, and the requirement for the identification of a “blockchain manager” and intermediation by a credit institution is not appropriate for security tokens and the underlying blockchain. To date, there has never been a regulated STO in France due to regulatory obstacles.