France Might Try to Prevent MiCA ‘Passports’ for Cryptocurrency Companies in the EU

France has signaled its intention to potentially block cryptocurrency firms operating domestically under licenses obtained from other European countries, raising concerns about regulatory enforcement gaps within the European Union’s crypto framework.

France’s securities authority, the Autorité des Marchés Financiers (AMF), informed Reuters on Monday about its worries regarding potential regulatory gaps in Europe’s Markets in Crypto-Assets Regulation (MiCA), recognized as the first comprehensive global crypto regulatory framework.

The AMF is apprehensive that certain crypto firms might obtain licenses in more lenient EU jurisdictions and is contemplating a prohibition on operating in France with MiCA licenses from other member states.

“We do not rule out the possibility of denying the EU passport,” stated Marie-Anne Barbat-Layani, chair of AMF, in her conversation with Reuters, describing it as “very complex,” similar to an “atomic weapon” for the market.

She further mentioned that crypto companies are on the lookout for a “weak link” in European jurisdictions that might offer a “license with fewer requirements than others.”

Under MiCA, which came into effect for crypto-asset service providers in December 2024, companies authorized in one EU member state can use this as a “passport” to operate across the entire 27-nation bloc. France’s warning underscores fears that inconsistent standards could jeopardize the framework.

Related: MiCA can attract more crypto investment despite overregulation concerns

France, Austria, Italy urge ESMA oversight of major crypto firms

France has joined Austria and Italy in urging the Paris-based European Securities and Markets Authority (ESMA) to oversee major crypto companies, based on a position paper reviewed by Reuters.

Austria’s Financial Market Authority and Italy’s financial markets regulator, Commissione Nazionale per le Società e la Borsa, have also requested a transfer of regulatory authority to ESMA.

The trio of countries has also supported amendments to MiCA, advocating for stricter rules on crypto activities outside the EU, enhanced cybersecurity supervision, and a reevaluation of regulations governing new token offerings.

Related: SEC chair promises notice before enforcement for crypto businesses: FT

This discussion comes in light of increasing criticism regarding Malta’s crypto licensing regime. In July, ESMA released a peer review assessing the Malta Financial Services Authority’s approval of a crypto service provider, concluding that the regulator only “partially met expectations.”

Following the review, the ESMA’s ad hoc Peer Review Committee (PRC) suggested that the MFSA “consider material issues that were unresolved at the time of authorization or that were not sufficiently addressed during the authorization process.”

The PRC noted that Malta’s MFSA “needs to closely monitor the surge in authorization applications” and timely identify and adjust supervisory practices as necessary.