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In France, the cryptocurrency sector[1], which was launched in 2017 with the Bitcoin bull market, really took off in 2019 with the PACTE law[2] and the creation of registration and approval[3]for digital asset service providers (PSANs) before strengthening in 2020 and 2021. Today, France has more than a hundred PSANs[4]. As such, Paris is the most developed center in continental Europe in terms of cryptoassets.
This is not unrelated to the fact that the ecosystem can count on the support, and even a form of goodwill, from the regulatory authorities (AMF, ACPR). This support was particularly evident in the decision by the cryptocurrency platform Binance, long courted by these same authorities, to choose France as its European headquarters in 2022. Interest groups such as ADAN (Association for the Development of Digital Assets)[6] and the League for Cybersecurity in Web 3 (LCW3)[7] also attest to the cooperation between the ecosystem and the authorities.
Nevertheless, despite these strengths, the evolution of the regulatory framework for cryptocurrencies in 2025 is likely to significantly reshuffle the deck. France and Europe are preparing to replace all existing regulations with a single European regime, MiCA (Section A.). The Commission thus wishes to upgrade the players in the sector while creating an attractive single market (Section B.). However, this is likely to lead to the flight, bankruptcy, or sale of a large number of PSANs that are unable to upgrade (Section C.). Cybersecurity requirements will also increase in the sector, even though decentralized finance will continue to escape any type of regulation (Section D.). Despite the expected gain in confidence in cryptoassets in this context, large European financial institutions will not commit to or accelerate their investments in cryptoassets until a wholesale central bank currency deemed completely secure is available and the cybersecurity of the technologies has improved (Section E.). Overall, France and Europe remain very well positioned in the coming competition, but must not give up in the face of an American offensive (Section D.).
A. A transition to MiCA until summer 2026
The cryptocurrency environment is set to undergo significant changes in 2025. The Markets in Crypto-Assets (MiCA) regulation, adopted in May 2023, will come into force on December 30, 2024, following an initial phase dedicated exclusively to stablecoins on June 30, 2024.
In this context, new entrants will no longer be able to obtain PSAN registration or approval from that date. They will only be able to obtain the European PSCA (crypto-asset service provider)[12] license introduced by the MiCA regulation, as this regime will soon be the only one in force. In addition, the hundred or so PSANs mentioned above are in the process of migrating to this new, highly demanding European regulatory regime. This migration must be completed by June 30, 2026[13] at the latest, at which point institutions without a PSCA license will be acting illegally if they trade cryptoassets.
Figure 1: MiCA regulation implementation schedule
Source: AMF.
In the meantime, PSANs can take several paths. If they do not have the enhanced registration offered by the French government as a bridge to MiCA from 2023[14], nor PSAN approval[15], in other words, if they only have a simple registration, or no legal status, they will have to follow the normal procedure[16]. If they have enhanced registration or approval, however, they may be subject to a simplified procedure, as enhanced registration and, even more so, PSAN approval have regulatory requirements similar to those of the PSCA regime[17].
B. Regulations aimed at bringing the sector up to the same level as other financial activities and creating a single market
Why does the MiCA regulation replace all existing European regimes for cryptoassets and stablecoins? First, because it aims to ensure that issuers of cryptoassets and stablecoins meet financial and regulatory requirements comparable to those of banks and other regulated financial institutions. This is why it is easy for banking institutions to obtain a PSCA license.
Given their proven compliance with European regulations, particularly in terms of capital and liquidity, a simple notification system allows them to obtain the license. This process is much lighter than all the others.[18] In addition, the MiCA regulation also makes it possible to create a truly single European market for cryptoassets and stablecoins, which represents an unprecedented opportunity for growth in this sector worldwide.
However, it is still too early to know whether there will be sufficient demand in Europe. If consumers do not adopt these new instruments on a large scale through, in theory, new use cases specific to the sector, the European market may remain small, with innovators fleeing to less regulated territories such as the United States or Asia.
Nevertheless, even if innovative players are not based in Europe, they will still need to have a European entity in order to operate legally on the continent. Thus, no outflow of European capital to other territories linked to the consumption of cryptoassets should be observed in the context of the introduction of MiCA.
On the other hand, if this implementation, due to the barriers to entry it creates, encourages economic players to invest more outside the European Union in the cryptoasset sector, this would mean that comparative advantages—which are proven in this case—jobs, and the associated wealth creation would no longer accrue to the Old Continent. In this context, the European Commission has incentives to reduce the requirements of the MiCA regulation, but this is not likely to happen before an initial assessment of its implementation, which will take several years.
C. Major rationalization ahead for PSANs unable to upgrade
Thus, in the context of this transition to MiCA – which, as explained above, involves an increase in regulatory requirements – industry experts believe that a major rationalization will indeed take place in France. Of the hundred or so PSAN-registered players in France, only around ten to fifteen could ultimately obtain a PSCA license, of which only two or three are truly French, since foreign cryptocurrency companies that have chosen France as their European headquarters, such as Binance, are also included. The rest are doomed to flee, disappear, or be sold off.
Indeed, PSANs are currently facing great difficulties in meeting the requirements of the PSCA license. Most are not at all ready and will probably not have the internal capacity to upgrade their organization, if only in terms of liquidity requirements[20]. Furthermore, these PSANs also have difficulties collaborating with the traditional financial sector. Since some PSANs are unable to open a bank account in France, they cannot, for example, obtain the insurance required by the PSCA license on their assets held[21].
D. A regulatory environment that is tightening in terms of cybersecurity, but DeFi remains completely unregulated in Europe
Beyond MiCA, French PSANs must also meet cybersecurity requirements[22] that will become legally binding with the entry into force of the Digital Operational Resilience Act (DORA) on January 17, 2025[23]. This European regulation aims to achieve objectives similar to those of the MiCA regulation: to raise the level of cybersecurity in the cryptoasset sector while creating a European market in this area. However, as with the MiCA regulation, the resulting upgrade in terms of cybersecurity represents a significant cost for all market players, and many are still not ready. After January 17, they may be subject to punitive sanctions if they do not meet the DORA criteria[24].
On the other hand, for a whole range of cryptocurrency-related activities, decentralized finance, also known as « DeFi, » which includes all tokenized financial activities (loans, savings investments, investments, purchases of derivatives, etc.) other than the exchange of cryptoassets and stablecoins, no regulation beyond the existing framework is on the agenda. Jan Kerstens, who is responsible for these issues within the European Commission’s DG FISMA, stated on October 14, 2024, at the Fintech Forum that times had changed and that if the Commission could avoid regulating in this area, it would do so[25]. Given the return of Donald Trump to the presidency, who plans to make the United States the number one nation in cryptocurrencies, this lack of regulatory constraints on DeFi in the long term is probably not a bad idea for capturing or maintaining innovation in the European Union, as long as the sector does not suddenly become massively popular.
E. Despite the confidence boost provided by MiCA, large financial institutions are waiting for a tokenized central bank digital currency and better technology before launching their investments in cryptoassets.
Finally, one last trend to keep in mind is the development of the tokenization of real-world assets. As a reminder, the tokenization of real-world assets involves creating a digital representation of a real-world asset, such as real estate or a sovereign bond, so that it can be traded or invested in cryptoasset markets, which its promoters consider to be more efficient and less intermediary-intensive than traditional asset trading structures.[27] This tokenization phenomenon could be facilitated by the establishment of a new institutional digital asset trading infrastructure, supported by major financial institutions as part of the European pilot scheme[28].
However, this project is unlikely to move forward quickly until the European Central Bank (ECB) has established a basic infrastructure for trading a tokenized wholesale central bank digital currency, which would serve as a benchmark for trading cryptoassets on such an institutional platform, as it would be a completely secure asset backed by the central bank. This is not the case with stablecoins, for which the risk of parity collapse is never completely zero if they are not backed by a central bank that can bail them out, particularly in the event of massive sales by consumers[29]. This central bank digital currency is in the planning stages[30]. Until it is available to the traditional financial sector, the development of cryptocurrency products and infrastructure by these players will remain very limited.
In other words, as long as tokenized exchanges do not inspire more confidence than those operating on today’s infrastructure, there will be no significant progress in the adoption of cryptoassets by a wide range of consumers. It is the role of European regulation and the ECB to build this confidence. It is also the role of technological innovation, such as high-performance Zero Knowledge Proofs[31], which guarantee the anonymity of blockchain transactions while offering an exceptional level of security.
F. France and Europe have a strong hand to play in the field of cryptoassets, and will have to defend themselves tooth and nail against the coming American offensive
Finally, the French and European cryptoasset sectors now have many advantages to strengthen their position: European and perhaps soon global standards for cryptoassets and their infrastructure, a very large market size, a developed innovation ecosystem, and a support system for innovative companies[32] – soon to be extended to the European level with the « 28th regime for young innovative companies .«
Nevertheless, if the Commission and Europeans are not prepared for the American offensive aimed at attracting talent in the sector, they could lose a lot in the long term. As in the context of the coming trade war with the United States, the French and European authorities will therefore have to act if the US government wants to undermine the growth of the sector and the market in Europe.
If we manage to remain competitive in this sector—with subsidies and/or customs barriers if necessary—and the United States does too, and if each side’s products are available on both continents, this will have positive repercussions in terms of innovation, jobs, and growth on both sides of the Atlantic.
[1] This term will be used interchangeably with « cryptoassets » and « digital assets » in this text to refer to the same category of financial assets. For a precise definition: AMF, What is a « cryptocurrency »?
[2] AMF, Digital asset service providers: the PACTE framework in detail, December 19, 2019.
[3] AMF, Obtaining PSAN registration/approval, September 9, 2024.
[4] AMF, List of registered PSANs.
[5] Le Figaro, Binance makes France the European capital of cryptocurrencies, May 4, 2022.
[6] ADAN, Our mission.
[8] EUR-Lex, Regulation (EU) 2023/1114 on markets in crypto-assets, May 31, 2023.
[9] AMF, Crypto-asset markets; publication of the European MiCA regulation, June 12, 2023.
[10] A stablecoin is generally a crypto-asset that ensures parity with a fiat currency through a monetary reserve system that allows it to match supply with demand. This type of stablecoin backed by a fiat currency (mainly the euro and the dollar) is the only one authorized by European regulations. Coinbase, What is a Stablecoin?
[11] Cryptoast, MiCA Regulation: what future for stablecoins in the European Union?, July 29, 2024.
[12] AMF, MiCA Regulation: applications for authorization as a PSCA can now be filed with the AMF, August 2, 2024.
[13] AMF, Cryptoasset markets; publication of the European MiCA regulation, June 12, 2023.
[14] AMF, Digital assets: the AMF amends its doctrine on PSANs to clarify the transitional provisions for « enhanced » PSAN registration, July 19, 2023.
[15] Only SG-Forge currently has this status (AMF, List of approved PSANs).
[16] ACPR, Presentation material for the Fintech Forum of October 14, 2024, p. 29.
[17] Ibid.
[18] ACPR, Presentation material for the Fintech Forum on October 14, 2024, p. 29.
[19] Anonymous comments gathered at the Fintech Forum 2024.
[20] ACPR, Presentation material for the Fintech Forum on October 14, 2024, p. 15.
[21] Revue des Professions Financières, To what extent can blockchain security and regulation generate financial costs? 05.2023.
[22] Ibid.
[23] ACPR, Presentation material for the Fintech Forum 2024, p. 6.
[24] Ibid., p. 37.
[25] Comments made at the Fintech Forum 2024.
[26] Cyptoast, What are RWAs (Real-World Assets) in the blockchain industry? 06.18.2024.
[27] Ibid.
[28] ACPR, Pilot regime for DLT market infrastructures, 07.04.2023.
[29] Friedrich Naumann Foundation, Organizing the Coexistence of Central Bank Digital Currencies and Private Stablecoins, 01.03.2023.
[30] ECB, Exploratory work on new technologies for wholesale central bank money settlement.
[31] Cryptoast, Zero-knowledge proofs (ZKP): principles and applications, January 26, 2023.
[32] Bpifrance, JEI – Young Innovative Company.
[33] European Commission, Political Guidelines for the Next European Commission 2024-2029, p. 7.
