Headline: What is France doing to become a leader in cryptocurrency?
Body: Oh, la la!! France is trying mightily to become tres chic in the eyes of crypto bros all over. So, beyond the Royale with cheese, how are they doing this?
Europe learned a lesson when different kingdoms were run very differently.
In Europe, there is a framework to deal with cryptocurrencies. This is called Markets in Crypto Assets (MICA). The advent of MICA standardizes the European approach to cryptocurrency and the standardizing of rules tends to encourage more cryptocurrency firms. This framework is being trotted out now and should be fully executed by the end of 2024. But, why France?
- Collaborative regulation of cryptocurrency.
- Broad and deep talent pool.
- Healthy capital flows.
A Collaborative regulation regime.
Mr. Macron sees cryptocurrency as something to be fostered in France, and committed 30 Billion Euros to create the” high tech champions of the future.” Toward this end,he has lowered taxation on cryptocurrency profits and simplified registration requirements. (It might not have hurt that a soft approach would be the antithesis of what the UK is trying to do.) Already, Societe Generale has been licensed. This is summed up nicely by one business executive. “When you are an entrepreneur, the worst that can happen to you is to set up your business where there is no regulation, to see an adverse regulatory framework later imposed that jeopardizes your whole business,” said Frederic Montagnon, the co-founder of LGO, a New York-based cryptocurrency platform that chose to launch an ICO in France.
In a related issue, France has offered to certify certain cryptocurrencies, and this certification should help boost sales. (As a part of this certification, the firm has to have a plan to hand cash back in case their project fails.) And, if sales are so good that there is a profit, the government can tax this profit.
A Broad and Deep Talent Pool.
There are 3 crypto firms (including Binance) that have headquarters in France, and Paris was the site just last year, for a major Ethereum conference.
There are Healthy Capital Flows
One of the articles mentions that France is the home of 32 unicorns (private companies worth over a Billion dollars. These companies do not professionally grate cheese or stomp grapes. Most often, the term unicorns refers to venture capital firms. So, these are essentially huge pots of money, looking for a good project to invest in.
There are other opportunities as well. Just recently, 2 crypto firms partnered up with the objective of funding of projects related to Web 3.0. In a separate move, the Ministry of Culture is offering 150 million Euros to promote “French cultural sovereignty” in virtual environments. Sacre Bleu!!! That’s a lot of money.
So, what’s the proof so far?
The proof is mixed. In France, there have been 15 ICOs, raising 89 million Euros. “The different regulators have been hyper, hyper-proactive,” said Paul Allard, chief executive of the Canada-based company, which intends to raise 400,000 euros via its French offering. But, the questions about taxation remain, especially related to the value added tax (VAT). The VAT is in question when a raw material is brought in, and a new material (a more produced, material) is shipped out. For instance, if bauxite is shipped in, and aluminum is shipped out, there has been value added to that raw material, and they will be taxed upon that added value. The question is,does “value added” apply to cryptocurrency?
The Verdict
Liberte’, Egalite’, Fraternite’!!! The words of a resilient France seem to be pulled directly from the soul of one who is involved in Decentralized Finance. France is a robust, developed nation, and we will see what they do with the opportunities and perils offered by cryptocurrency.
REFERENCES
https://www.reuters.com/article/idUSKCN1NK1ZQ/
https://cointelegraph.com/news/crypto-leads-2023-fintech-investments-france-germany
Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice. Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.