France to Tighten Regulations for Financial Instruments Including Cryptocurrencies
French Finance Minister Michel Sapin has announced increased control of “the use of cash in France.”
French Finance Minister Michel Sapin has announced increased control of “the use of cash in France.” Starting from September 2015, French daily Le Parisien reports, all cash transfers will be monitored, leading mostly likely to cryptocurrency regulations being tightened.
The restrictions proposed by Sapin planned to take effect this September will include a 1000-euro limit on cash payments and mandatory reporting by banks of accounts which exceed 10,000 euros per month to the Money Laundering Authority TRACFIN. Regulations will also be refocused for “financial instruments that escape the oversight of the financial system,” Forex Magnates reports.
Le Parisien did not provide specific information on the alleged “regulations” as they pertain to financial instruments. However, rumors suggest that the transactions of digital currencies will be regulated, conforming as they do to the aforementioned type of “financial instruments.”
Most likely, the regulations will heavily focus on the purchase of Bitcoin using cash and income tax for cryptocurrency transactions, as the French Ministry of Economy and Finance announced last year - “All taxpayers are required to declare all their revenues, including those originating from abroad. This said, there is a certain tolerance [from the state authorities] regarding minor and irregular revenues, for instance from occasional sales.”
Ironically in July 2014, Sapin had given a speech on Bitcoin regulations, explaining that France was not interested in enforcing strict regulations on Bitcoin transactions. Following the statement, a report titled “Regulation in the face of innovation: public authorities and the development of virtual currencies” was released by the French Senate in August 2014, which was discussed between committee president Philippe Marini and Senate member Francois Marc.
Reported by Cointelegraph, the document stated that the technology "can no longer be disregarded by public authorities" and, despite the risks, "Bitcoin offers multiple opportunities for the future, both as payment system and, above all, as a decentralized validation protocol."
Sapin’s attempt to regulate financial instruments may have arisen from a possibility that major financial instruments such as Bitcoin could challenge the Euro, or at least act as an alternative currency in France. This is not an overly optimistic statement after all, as the Bitcoin industry in France has been growing consistently over the past few years.
On April 22, 2014, CoinDesc reported that Europe’s first Bitcoin center named La Maison du Bitcoin (The House of Bitcoin) was set to open in May that year. Today, the center offers co-working spaces and assistance for Bitcoin companies, along with workshops, hackathons, meetups and a Lamassu Bitcoin ATM.
Four months after the opening of La Maison du Bitcoin, French Startup MineOnCloud installed the nation’s third Bitcoin ATM manufactured by BitXatm, the same ATM manufacturer Canada’s largest Vitcoin exchange QuadrigaCX partnered with last month.
The active Vitcoin meetup (Paris Bitcoin Meetup) and community of startups managed to increase Bitcoin awareness in Paris, which encouraged more than 50 merchants (registered in Coinmap.org) to accept Bitcoin. However, heavy regulations on Bitcoin exchanges have substantially slowed the potential growth of the Bitcoin industry in France.
Reported by Reuters on 7 July, 2014, French police raided a home of one of the founders of a supposed “illegally run Bitcoin exchange” and seized 388 BTC, worth US$200,000 at the time.
Olivier Caracotch, prosecutor in the town of Foix explained, “It's the first time in Europe that a judicial action has resulted in the closure of an illegal exchange for virtual currency.”
The Bitcoin industry in France has great potential, especially with the support for Vitcoin startups and traders provided by La Maison Du Bitcoin and the Paris Bitcoin Meetup, which currently has more than 700 members. However, heavy regulations on Bitcoin transactions and exchanges in France make it extremely difficult for any type of Bitcoin business to run in the country.
With the aforementioned regulations and the control of financial instruments by the French Government set to be “tightened” this September, it becomes even harder to speculate on the future of Bitcoin startups, exchanges and traders in France.