The French Ministry of Finance will soon implement new KYC measures for cryptocurrency transactions, requiring identification of each user before making any transaction regardless of the amount of said transaction.
The government France to tighten Know Your Customer regulatory measures also known as KYC (for its acronym in English), within the companies of cryptocurrencies, and exchanges cryptocurrency exchange, for transactions carried out from crypto to fiat and those carried out from crypto to crypto. Likewise, regardless of the amount of the transaction, all users who use financial services with cryptocurrencies must present their identification before carrying out any commercial operation.
The new KYC measures will be mandatory and respond to the country's need to guarantee the national security of the state and its citizens, considering that France has been the victim of several terrorist attacks in recent months and that the authorities point to cryptocurrencies and digital assets as possible sources of financing for these illicit activities.
Simon Polrot, the president of ADAN (the French cryptography association) Simon polrot, he said during a interview Polrot told The Block that the country’s Ministry of Finance had spoken to him about the new regulatory measures to be implemented because this association is considered a “trusted interlocutor” for matters related to cryptocurrencies and digital assets in the country. Polrot expressed that the French Ministry of the Interior and the Prime Minister’s Office are also actively participating in the implementation of these new regulatory measures.
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A new stage of regulations begins
Although the French government has not yet legally imposed the new regulations, the ADAN executive notes that discussions with the entities involved are quite advanced, so it is expected that within the next few days the government will reveal and demand the implementation of the new guidelines.
Likewise, The Block indicates that two other sources were also informed of the new measures that will soon be implemented in the country. The cryptocurrency exchange and custodian, Coinhouse Group, which is regulated by the AMF of France, and Digital Service Group, which is awaiting licensing approval from the country's regulator.
In France, the State Court recognized a Bitcoin Bitcoin was officially approved as a legal tender in the country at the end of March this year, marking a major milestone in the history of cryptocurrency and allowing citizens to freely conduct business operations and transactions with this digital asset. Since then, and up to the present, only those who carry out commercial operations that exceed 1.000 euros must identify themselves and comply with the KYC measures of cryptocurrency exchanges and companies. Now, with the implementation of the new regulations expected in the country, any user of Bitcoin and other cryptocurrencies must present their identification before carrying out any operation, regardless of the amount of the transaction.
The country's Finance Minister had been announcing new regulatory measures since mid-October.
These are difficult times
Polrot reported that the most important reason for the French government to implement these new measures, to cryptocurrency companies and services, is the National security.
France has been the target of terrorist attacks that have endangered the lives of its citizens and the country's national security, so the government is taking a tougher stance to combat terrorism, and that includes strengthening regulatory controls within the financial and cryptocurrency sector.
In September, French authorities arrested 29 people across the country who were allegedly linked to Islamist extremists in Syria. They were allegedly using cryptocurrencies as a source of funding. report The Associated Press reports that the 29 people were suspected of providing funds and logistical support to a terrorist financing network with members of the al-Qaida-affiliated Hayat Tahrir Al-Sham organization.
Likewise, the authorities revealed that since 2013 these terrorist groups had been using cash as their main source of financial resources, but that a financial crimes investigation team from the French Ministry of Economy, called Tracfin, detected several transactions involving cryptocurrencies that financed “French jihadists who remained in Syria.” Authorities have been conducting a deeper investigation into how the arrested suspects had been buying cryptocurrencies on the market, revealing that many carry out constant transactions worth between 10 and 150 euros, going unnoticed.
“The prosecutor’s office said dozens of people in France steadily and anonymously bought cryptocurrency vouchers worth 10 to 150 euros ($11 to $165). The vouchers were credited to accounts opened abroad by jihadists who then converted them into cryptocurrency. The cryptocurrencies can be sold for cash on online exchanges.”
New KYC regulations as a state decree
Under the decree, the French government can establish new regulatory measures without the need for parliamentary approval processes. In this way, the new regulations will be established directly by the state, making it mandatory for cryptocurrency exchanges and companies to request full KYC and verify their users and customers in all operations carried out with cryptocurrencies and digital assets.
On the other hand, the new measures to be imposed are causing concern among exchange operators and cryptocurrency service companies present in the country, pointing out that the cost of these services will increase if they have to request full KYC. This in turn may lead French users to look for alternatives in foreign exchanges, although the measures will be imposed both on exchanges based in France and those providing services to citizens of this country.
Still, cryptocurrency service providers point out that they will not be able to provide an optimal experience to users and will lose many casual customers who transact occasionally. Lastly, The Block notes that an official source from the Ministry of Finance confirmed that the new measures will be implemented during this month and that unregulated cryptocurrency companies, exchanges, and custodians, both crypto-to-fiat and crypto-to-crypto, will have 6 months to apply for and obtain their licenses. Otherwise, they could face fines and prison sentences if they operate illegally in the country.
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