France is challenging how MiCA’s passporting works, warning that crypto firms may exploit looser EU jurisdictions. Regulators want stronger EU-wide oversight to prevent “regulatory shopping.”
France is raising alarms that some cryptocurrency firms may exploit the European Union’s Markets in Crypto-Assets Regulation (MiCA) by seeking licenses in member states with looser oversight. The concern: once licensed in one EU country, firms can operate across the bloc through the passporting mechanism—potentially bypassing stricter regimes like France’s.
The French securities regulator, the Autorité des Marchés Financiers (AMF), is now weighing whether to block firms from using EU-issued licenses to operate in France, less than a year after MiCA took effect.
France’s Challenge to Regulatory Arbitrage
MiCA was designed to establish a single, harmonized framework for crypto regulation in the EU, ensuring that one license could cover operations across all member states. But differences in interpretation have created openings for what regulators call “regulatory shopping.”
Companies may choose jurisdictions with more relaxed enforcement, undermining MiCA’s intent of a level playing field.
Marina Markezic, executive director of the European Crypto Initiative (EUCI), acknowledged the complexity:
“Blocking passporting under MiCA is technically possible, though it comes with significant legal complexity.”
Legal Debate: Can AMF Block Passporting?
The idea of restricting passporting has stirred debate among legal experts.
- Edwin Mata, lawyer and CEO of Brickken, argued that France cannot unilaterally block firms:
“MiCA is a regulation, not a directive, which means it applies directly and uniformly across all Member States.”
He noted that while the AMF can monitor firms and escalate issues to the European Securities and Markets Authority (ESMA), it cannot impose its own barriers. The AMF’s warning may instead be aimed at deterring firms from exploiting loopholes—for instance, misclassifying products under MiCA that should fall under other EU rules such as MiFID II.
Strengthening EU Crypto Supervision
The dispute has also revived calls for ESMA to play a larger role in crypto oversight. France, Austria, and Italy have jointly urged stronger EU-level enforcement to avoid regulatory fragmentation.
Their proposals include:
- Enhancing cybersecurity requirements.
- Tightening token management rules.
- Increasing scrutiny of non-EU operations.
The goal: ensure that crypto firms across the EU meet consistent, high standards of compliance and transparency, preventing regulatory arbitrage that could destabilize the sector.
The Bigger Picture
France’s stance highlights a core tension in MiCA’s rollout—balancing national oversight with the EU’s promise of uniform rules.
As institutional adoption grows and crypto becomes more deeply embedded in European finance, the way passporting rights are enforced will determine whether MiCA delivers a truly harmonized market—or fragments into competing national regimes.
