Europe: the burning question of the number of regulators

Wednesday, October 4, 2023

While Europe has by far the most advanced regulation in the world, some are concerned that regulators lack the resources to apply it effectively. In France, the government could increase the number of staff at the Autorité des marchés financiers (AMF).

It's a recurring topic this autumn in the crypto ecosystem. Every year, or almost every year, the Association for the Development of Digital Assets (Adan), the main lobby for the sector in Europe, campaigns for an increase in the number of staff dedicated to crypto topics within the Autorité des marchés financiers (AMF). So far without much success.

But things are changing, as Adan is close to winning its case on the issue. As part of the 2024 Finance Bill, the government has proposed the creation of 5 new posts at the AMF, a measure that obviously still has to be voted on following parliamentary debate.

"This is a very good thing, but we remain vigilant because the increase in the AMF's ceiling by 5 posts must be used for 'sustainable finance and digital finance' issues and the AMF retains full latitude to allocate these staff internally", says Faustine Fleuret, president of Adan.

Insufficient staff to manage MiCA

This increase in staff would be warmly welcomed by the French industry, which has sometimes complained behind the scenes about the administrative slowness regarding digital asset service provider (DASP) registrations.

An issue that is set to become even more pressing as firms begin to have to structure themselves and, above all, begin more cumbersome authorisation processes with the forthcoming entry into force of the MiCA regulation.

A number of regulatory experts assure The Big Whale that, as things stand, the AMF's staffing levels would be insufficient to carry out the supervisory tasks required by MiCA properly and quickly enough.

Binance France managing director Stéphanie Cabossioras, who has been campaigning for this for several weeks now, has made it an issue of sovereignty. "France and Europe are not alone. The market is up for grabs today, not tomorrow [...] If players setting up in France take 18 months to obtain their authorisation, it's not tenable", she warned.

International competition set to increase

For the time being, Europe and particularly France, whose regulations largely inspired the broad outlines of MiCA, are prime landing spots for many global champions.

An attractiveness that is largely explained by the clear and harmonised regulations to come, but also by the regulatory vagueness that reigns in the United States, which is driving giants like Coinbase to look elsewhere. But for how much longer?

Things are moving, particularly in Asia, where Hong Kong has had a regulatory framework in place since the summer, allowing institutional investors to start positioning themselves. Until now, the former British colony had been very conservative on the subject under the influence of its neighbour China, which sees cryptos as a tool that is still difficult to control.

This analysis is not investment advice. It has been prepared without taking into account your personal situation, particularly your financial situation, risk profile, and investment objectives.

Before investing in any product, investors should fully understand the risks involved and consult their own legal, tax, financial, and accounting advisors.

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