Last week, Robert Ophèle, President of the Autorité des Marchés Financier (AMF), presented the 2017 AMF annual report to the Finance Committee of the National Assembly. Ophèle took the opportunity to address a wide range of topics but notably on the list was the Pact Act and initial coin offerings (ICOs).
The AMF has announced a priority for 2018 to;
“… continue to reflect on changes in the regulatory framework in the face of new offers, in particular the Initial Coin Offerings (ICO), and to promote at European level the French regulator’s approach to innovation.” [translated]
The current government has publicly stated its interest in becoming an ICO jurisdiction of preference.
According to the AMF Annual Report, the agency has taken “thorough” work on blockchain and ICOs;
” … This work – which resulted, in particular, in a public consultation of the AMF at the end of 2017 on the different management options for ICOs – aims to change the French regulatory framework and to feed European and international working groups on these subjects. In parallel, considering that certain forms of ICO could in the future constitute an alternative mode of financing for a segment of the economy in connection with blockchain technology, the AMF has launched a program of support and research of ICOs. . Called UNICORN (Universal Node to ICO’s Research & Network), this program aims to provide project owners with a framework for developing their operations and to ensure the protection of the players and investors wishing to participate. The AMF has also set itself the goal of encouraging academic research on this subject. At the same time, in collaboration with the ACPR, it has also carried out awareness-raising campaigns to identify the risks associated with this type of investment or investments in bitcoins for unsuspecting customers.”
Ophèle, in his prepared remarks, addressed the need of “vigilance” and striking a balance between innovation and “toxic investments.”
“Financial innovation is, on the one hand, artificial intelligence and the use of big data, on the other hand, it is distributed ledger technology and crypto-assets. These are powerful factors for revisiting in-depth traditional financial intermediation but also for developing disintermediation. The AMF is very mobilized to support these innovations and to avoid the harmful effects; it supports the supervision of the ICO, I hope we will have the opportunity to discuss it again in the context of the review of the Pact Act. But innovation is also the breeding ground for scams and uncontrolled marketing of risky products; Bitcoin provides some examples. 2017 saw the first fruits of the new regulatory framework introduced by the Sapin 2 law – the prohibition of advertising for binary options and for highly leveraged CFDs – as well as the efforts made by the AMF and largely relayed by the media to alert and educate savers. But it is a field on which offers are constantly renewed and after the wave of Forex, after the diamond wave, it is the crypto-active who took over. In the first five months of the year, out of the more than 5,000 requests processed by our “Epargne Info-services” center, 1000 concerned crypto-assets with nearly 400 claims or reports reporting losses of € 15 million.”
The PACT Act is expected to be out later this year. The legislation should included the regulatory approach of France for ICOs.