France has unveiled its plans to impose new, stringent rules for its crypto space. The president of the French Crypto Association, Simon Polrot has revealed that the French Finance Ministry is on the verge of regulating crypto-crypto transactions as it also plans to harden know-your-customer (KYC) rules across all cryptocurrency firms operating in the country.
What is Contained in the New Rules?
Should the new rules which were put forward on the 9th of December by the French Finance Ministry, the French crypto space will effectively be stripped of any form of anonymity.
The Finance Minister, Bruno Le Maire, in a press release explained that the new know-your-customer (KYC) requirement involves prohibiting anonymous cryptocurrency accounts in France. Furthermore, all cryptocurrency firms must immediately begin a process to identify all their customers and verify owners of digital assets.
Mandatory Registration of Crypto-Crypto Exchanges
Crypto to crypto exchanges are not left out of the proposed rule to regulate the French crypto space. Currently ongoing is the registration of crypto to fiat exchanges and cryptocurrency custodians. Firms offering these services have been given until December 18, 2020, to obtain an operational license or else face fines and possible imprisonment.
The proposed measure also insists that crypto-to-crypto exchanges be mandatorily registered. Although the scope of the registration is yet to be defined, these firms may be given a six-month duration period to comply.
There have been reports that the Finance Ministry is preparing to publish a decree in the coming days to back the new rules. In France, a decree is equivalent to the rule of law, and it does not have to go through any parliamentary approval processes.
Why is France Fighting Crypto Anonymity?
All opinions regarding the push for stricter measures point towards the terrorist attack that happened in France this year. In October, three people were killed in what was described as ‘Islamist terrorist’ stabbings.
The government revealed that the terrorists responsible for the attack were funded with cryptocurrency. Prior to the incident, the French police in September had apprehended 29 people on counts of funding Islamist extremists in Syria using cryptocurrency.
In October, Le Maire had announced on national television that cryptocurrencies could be a challenge in their fight against terrorism. In an interview with The Block, he said:
This demand, which emanates from players in the ecosystem, will make it possible to fight against the anonymity of transactions in digital assets while facilitating the identification of users
The new KYC requirements for crypto firms comes as France’s first push in its fight against anonymity in crypto. Besides its security robustness, the success of cryptocurrencies was largely due to the anonymity it provides. In the coming days, we would see how the threat against anonymity in the French crypto space plays out.