France: France’s financial regulator released a statement Thursday stating that financial products based on cryptocurrencies would be formally regulated as derivatives. The statement also includes a curb on the advertising of such products, this means that online trading platforms would need authorization to offer these crypto derivatives products and can no longer advertise them online.
In the statement, the Autorité des Marchés Financiers (AMF) said that online trading platforms would no longer be allowed to market and advertise crypto derivatives products electronically, per regulations that cover derivatives more broadly. According to the AMF, the publication followed a months-long review process.
The agency said:
“The AMF concludes that a cash-settled cryptocurrency contract may qualify as a derivative, irrespective of the legal qualification of a cryptocurrency. As a result, online platforms which offer cryptocurrency derivatives fall within the scope of MiFID 2 and must therefore comply with the authorization, conduct of business rules, and the EMIR trade reporting obligation to a trade repository. Above all, these products are subject to the provisions of the Sapin 2 law, and notably the ban of advertisements for certain financial contracts.”
The EU’s Markets in Financial Instruments Directive (MiFID II) is an update to prior legislation, with the stated goal of offering greater transparency across asset classes so as to offer protection to investors. The initiative came into effect on January 3.
The AMF’s notification is the latest from the agency on the topic of cryptocurrencies, which comes months after it first weighed in Initial Coin Offerings (ICOs). In October, the agency launched an ICO-focused initiative, dubbed the Universal Node to ICO Research Network (UNICORN).
According to statements at the time, the effort was aimed at “offering to these carriers of projects a frame allowing the development of their operations and to ensure the protection of actors and investors wishing to participate.”
Other regulatory bodies within the EU have also been looking into the issue relating to crypto derivatives. For instance, the European Securities and Markets Authority (ESMA) is examining if such contracts comply with MiFID rules, and announced in January that it was looking for public input on potential rule changes. The UK government announced it would be launching an investigation into the “opportunities and risks” surrounding cryptocurrencies, with the aim of establishing a way of regulating the technology in future.
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