France struggles to be along the crypto-scale as a crypto-opponents or supporters classify. During the 2018er G20 summit the country was as a Blockchain-pioneer. At the same time France is, in terms of its ICO-volume, but of very much smaller neighbours such as Switzerland, in the shadows.

On the 26. April was, however, reduced the tax rate on profits in the crypto-trade. Let us take a closer look at the French crypto-environment throw and analyse the latest regulatory developments to assess.

crypto-Regulation of

government agencies around the world are good reasons to intensify their efforts for the regulation of Blockchain-technologies in the application. First of all, this fits into the mandate, against organised crime, of financial flows to be monitored. If the agencies are successful, remains open, it is certain that this goal alone will be enough to deal with the governments, as long as Blockchain exists.

in addition, each Nation is trying to promote their businesses and regulations are an essential Element when it comes to competitiveness. How important regulations are for a successful Blockchain environment, can be seen in the following example: a trusting, safe environment promotes investment, this in turn, may promote innovation. A safe (adequately regulated) environment may, under circumstances, even the General user to deal with a product whose technology has not yet been legitimized, clearly.

regulation in Europe – latest developments

for The years 2017 and 2018 seem to be marked by ever more intensive regulatory efforts worldwide and specifically in Europe. The Swiss financial market Supervisory authority (FINMA) of Switzerland, issued a topology for Token. Those classification could be used because of their clarity and pragmatics as a reference for discussions anywhere in Europe. It is no wonder that Switzerland (see also „crypto Valley“) has emerged as a global pioneer in this industry. The Italian economy Ministry is working on a decree that the use is to classify the possibilities of crypto-currencies in the country.

If you look at the global crypto-map lights France actually with some successful projects. One of them is called ledger.fr and is now one of the extremely future-oriented governments in Europe. This raises the question: what is the rule in France for legal framework?

The French case

On 15. January 2018, the French economy Minister Bruno Le Maire called for a working group under the leadership of Jean-Pierre Landau, the currencies of the regulation of Crypto as a destination has prescribed. It is not quite clear, what is the potential of Landau in the Blockchain-technologies looks exactly, however, he is an editorial contributor to the Financial Times, 2014, with, say, „beware of Bitcoin-mania, the Tulip of the 21st century. Century“ translated. This means that the French are against crypto-innovations?

Probably not, as Laurent Leloup, a Blockchain expert and consultant for Initial Coin Offerings (ICO) in Paris, explained to Cointelegraph to:

„The General legal and business context is very well. Already when he was Minister of economic Affairs, initiated Emmanuel Macron (the current President of France) extensive discussions with the crypto-world in France. What is the subject about „Mini-Bonds“ began, and continues today with a jumble of parliamentary discussion groups, and consultations with state agencies such as the AMF (stock market authority in France) and the private sector.“

Bruno le Maire seems to be on the G20 in Buenos Aires, a strong Pro-Blockchain-to have the attitude: „France will not miss the Blockchain Revolution.“ In addition, he called on France, a pioneering role in the international development of the Blockchain.

in fact, Gilles Fedak, the computer scientist behind the first major ICO in France, iExec (market introduction in April 2017), Cointelegraph to log:

„The French Regulator is technically very accomplished and demonstrated its willingness to engage with entrepreneurs from the area in contact.“

With respect to the recent past, some of the important steps in the adaptation of a regulatory framework for crypto-currencies in France:

8. December 2017, the government published a decree that deals with the ways to Send financial securities on a Blockchain; On 22. December 2017, published by the AMF the authority of the financial markets – the results of a public poll on the Blockchain, cryptocurrencies and ICOs; On 15. January 2018, the French economy Minister Bruno Le Maire called for a working party, headed by Jean-aims to help Pierre Landau in the regulation of crypto-currencies; Last updated on February 26. In April 2018, the Conseil d’etat (Council of state) has published new guidelines on the tax treatment of Bitcoin, in the course of this article.

Problem #1: there Is a „Blockchain-Set“ in France?

France, like the USA, base their Laws on the texts and the court decisions based on it, the apply the and interpret. Problems with Blockchain-technologies together, fall under one of two regulatory categories:

Some of the existing regulations – such as money laundering regulations, criminal law, law of Evidence, and tax rules apply by default for some Blockchain issues. Some of the Laws that have been developed specifically for Blockchain technologies. The on 8. December 2017, the government promulgated the decree, for example, that deals with a variety of options for securities settlement along the Blockchain.

other than in the United States, where the courts already with some Blockchain and crypto have set the cases apart, there are no judicial precedents in France, apart from a recently felled decision regarding the taxation of Bitcoin by the state Council.

therefore is the legal framework for Bitcoin in France, which currently consists of a single Text and a single decision, even a relatively uninteresting.

Problem #2: the aim of the regulators to a special Token classification?

As was mentioned at the beginning, have been so far proposed a number of possible classifications for the Token. These debates dominate the public debates in the respective countries and play an important role in the development of a legislative framework for Token. The AMF, which can be considered as a French Version of the FINMA, advised by the end of 2017 with a selected group of experts in the Blockchain-industry and came to the following two main results:

first, they decided the classification/Definition of Token in one of two categories (In contrast to the three categories of FINMA):

„use Token“: Token, to transfer the owners right, and to the use of technology and/or services enable presented by the ICO-organizer. „Value of paper-Token“: Token, which include financial or critical privileges: Those Token to talk to the owner of financial rights or special voting rights. The political and/or financial rights conferred by this Token, can lead to a situation that they are classified under applicable law as „financial instruments“.

Second was put together a Repertoire of standard practices for ICOs.

Problem #3: what is the legal framework for ICOs in France?

The French ICO-industry is still in the beginning phase and has a fraction of the volume that can be observed in Switzerland and in the USA, or Singapore.

As already mentioned, there are in France, no specific legal framework for ICOs. Practically, this means that the leading banks and accounting firms – as is often inevitable first conversation partner of each company – are very cautious on any kind of crypto-business. The AMF, however, has announced a series of regulations for ICOs.

the token classification, there are some proposals regarding the information that must be provided in a white paper. This should in particular lead to the following information:

A description of the project with reference to the ICO and its assessment; the rights conferred by the Token; the competent court in the event of a conflict; and the economic and accounting treatment of the ICO acquired funds.

In the near future, could submit those ICOs that adhere to these guidelines and other best practices, but these are „Best Practices“ are still legally defined to be – a white paper, to get a kind of „Visa“ by the AMF (or a subsidiary). William O’rorke, a legal adviser at the Blockchain partner, explains:

„France, a completely new framework for ICOs to introduce a voluntary licensing system, which includes several of the French crypto-industry-promoted Best Practices. ICOs, which operate according to these best practices, can apply for an official confirmation by a Regulator. Effectively, this „VISA licensed“ the ICO market by the AMF or a subsidiary and unregulated ICOs columns.“

The importance of this Visa should not be played down. In Tandem with the difficulties, many of whom are entrepreneurs report, which interviewed Cointelegraph, describes William O’Rorke:

„Since today is seem to be simple things like Opening a Bank account, be a Problem for crypto-projects.“

to work, A Visa System could make it easier for licensed and ICOs with third parties, such as banks and accounting firms. It is also interesting to see how the innovative aspect of the voluntary system arrives at the international level. Laurent Leloup says:

„Franreichs Visa approach, for example, forms a contrast to the „Sandbox System“, which is currently being operated in Switzerland.“

However, not all are fully convinced of the approval approach. Adli Takkal Bataille, the President of the French Association Le Cercle du Coin („round Coins“), gave to Protocol:

„In a way, has the concept with supply companies to tell regulators more easily made, that „everything is fine“ and give them an excuse not to act, even if the risk for investors may be high. In contrast, the regulators have followed in America a approach of the Token as the „securities“ classifies and investor protection in the first place.“

The future will show which solution overcomes the best of the conflict between the objective of investor protection and a highly regulated innovations. Surprisingly for France, it seems the Latter is preferable.

Problem #4: tax liability for crypto-traders in France

A majority of the French people believe, incorrectly, that the existence of a „legal vacuum“ with regard to the tax liability for Bitcoin. The official tax statement (Bulletin officiel des impôts) is continuously written from the General Direction of Public Finance – a French tax authority and to revise and released in 2014 for the first time clear rules for the taxation of crypto-currencies:

gains from the sale of crypto-currencies, if they occur only occasionally, the income tax in the category of „Non-Profit“ (similar to one-time gains from a non-professional activity, such as by a single sale on Ebay. As long as it is not a professional activity, to be handled in these profits as a „non-profit“ Item for tax purposes); If the activity occurs regularly, it becomes part of the control system for the „industrial and commercial profits“ (for example, income from professional activities); Non-covered credit Transfers, for example, gifts in crypto currencies are stored on a Ledger are also subject to transfer duties and fall subject to in the field of application of international conventions. 26. April explained the Council of state its tax opinion von Bitcoin in France. The Flowchart item to consider is the profits as follows: in Principle, as a „capital gain on Transfer of movable goods,“ when money is earned through the unique buying and selling of Bitcoins; in exceptional cases, as „not commercial gain“, if a direct participation of the seller in „the creation and Operation of the system“ (which is also the case on Mining profits).

Effective France is moving from a progressive tax system (14 to 45 percent) on a fixed 19-percent tax system. The decisions relate only to Bitcoin, but in the spirit and in practice – to make decisions also on other Coins.

In terms of France’s Position in international comparison, is not afraid of Adli Takkal Bataille, competitive jurisdictions in the equation include:

„Even if the recent Changes in the tax systems for small investors are advantageous, they are for larger players as restrictive as ever. The risk is that you encourage an Exodus to countries that are fiscally more attractive. A real solution would have to be created at European level. „

Problem #5: the taxation of crypto-equipment of enterprises, the ICOs in France to hold

The 2014 published guidelines focusing on how most of the legislative functions, so far, the tax obligations for individuals. The tax liability for ICOs on the other hand, their often unclear. Gilles Fedak notes:

„The Visa System should establish guidelines for the settlement of ICOs: for example, what must be in the white paper. This is a critical point of the non-illustrated, however, without further elaboration, such as crypto-assets in the accounts should be treated. Thus an accountant will not know, even after the introduction of the Visa system, how to crypto-treated plants of ICOs. On the other hand, the taxation in the crypto-trade will be slow to clear, starting with the decision of the state Council.“

The accounting regulations for crypto-equipment for the balance sheets of a company, a question mark will remain. This is a lot of uncertainty as accounting, advance tax is levies. When introduced clear Standards? Not before the end of the year, William O’Rorke:

„A key element for the industry, the clarification of the accounting rule for Kryto-systems. They define their taxation. We expect a clarification in the Radius of our forthcoming tax reform is announced for the end of 2018.“

meanwhile, the number of promising Blockchain projects in France, day-to-day to be multiplied, while at the same time a whole Ecosystem of Finance, research groups, and Tech incubators developed.

A competent and willing regulatory… still a lot of work ahead of you

The French regulators only support willingly Blockchain entrepreneurs, they are self-applied on the area of the underlying technology. As a result, France is well positioned to take on more responsibility in the burgeoning crypto-industry.

to develop so Far, the law makers have worked mainly due to the fact, a legal framework for the Trading and Transfer of crypto-currencies. It up in front of all, booking technical regulations for the handling of crypto-systems have to be created, especially in the context of ICOs,. What happens next? Cointelegraph keeps you up to date.

The original article was jointly written by Pierre de Boismenu, technology lawyer at Bensoussan & Associés in Paris, Samuel Martinet, a former researcher at the Imperial College London, currently working in Paris, and the Cointelegraph-editor-in-chief Lucrezia Cornèr.