The French PACTE law has created a new legal framework for digital assets (actifs numériques) including, but not limited, to assets recorded in, and transferred through distributed ledger technology / blockchain.
The provision of such services triggers, depending on the type of service, either a mandatory or an optional license with the French authorities (AMF and ACPR) as digital assets services providers (DASPs). Services on digital assets do not benefit from any passport within the EU/EEA.
Further, it is questionable how such French regime should be combined with other types of instruments potentially simultaneously applicable such as electronic money and digital payments (which are regulated at the EU and not at a national level in France). This type of issues should be considered carefully and analysed on a case-by-case basis when building a new platform of digital assets or creating a new digital assets product issued or distributed in France (or having connection with France).
Article D. 54-10-1.-1° of the French monetary and financial code, as amended by Decree No. 2019-1213 of 21 November 2019 related to DASPs, defines each of the services entering into DASP’s scope. Interestingly, the service of custody of assets recorded in a DLT using asymmetric cryptography is deemed to be made through the keeping of cryptographic keys. Indeed, digital assets being dematerialized, the custody of such assets is necessarily made inter alia through the safekeeping of means of access to such digital assets, i.e. safekeeping keys providing themselves a direct or indirect access to the digital assets.
The service of purchase of digital assets is defined as the purchase (or sale) of digital assets by the DASP (who may, or not, use its own balance sheet) against a legal tender. In the same vein, exchange of digital asset does not necessarily requires, in order to be triggered, that the DASP uses its own balance sheet.
As for the MiFID II definition of operation of multilateral trading facilities with respect to financial instruments, a DASP bringing together multiple third-parties buying and selling interests in a way that results in a contract on digital assets should trigger, in accordance with this new decree, the service of operating a digital assets platform.
Reception and transmission of orders and execution of orders on digital assets are equally inspired by the investment services regulation. Further, portfolio management of digital assets requires a mandate from the holder of such assets, and to characterize a service of advice on digital assets, a personal recommendation must be provided at the request of the client or the provider and may relate to one or several digital assets. The services of underwriting and placement (on a firm commitment basis or not) on digital assets are equally undoubtedly inspired by investment services regulation.
It is questionable whether services related to collateral management on digital assets or intermediation role amount to any of these services. This new decree – and further, the relevant legislative provisions arising from the French PACTE law – cast other ambiguities and notably the scope ratione loci of these new provisions and therefore, a case-by-case approach remains advisable given the novelty of these provisions and pending expected guidelines from the authorities.
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