Le Autorité des marchés financiers (AMF), France’s equivalent of the Financial Conducts Authority (FCA), has stated that after an “in-depth study” they found most ICOs are “outside any regulation where the AMF ensures compliance.”
In free countries, such as France, anything that is not explicitly illegal is very legal. However, just because AMF does not have jurisdiction over most ICOs, it does not mean other laws might not apply. Although, as the main regulatory body of financial activities, it might actually so be the case.
“As part of its actions and follow-up in terms of innovation, the AMF has carried out an initial in-depth study of these operations and their legal implications.
It emerges from this first study that if some of the observed ICOs could be subject to existing legal provisions (regulation applicable to intermediaries in various goods, to the offer to the public of financial securities or to managers of alternative investment funds, in particular ), most of these issues would remain, in the current state of the law, outside any regulation which the AMF ensures compliance,” the regulator said according to a very rough translation.
It’s unclear what they mean by “innovation,” a term which, where regulators are concerned, reminds us of UK’s FCA sandbox. AMF doesn’t clearly state any such plans, but they do say they are to set up a Universal Node For ICO Research & Networking.
The acronym for the new initiative will be a UNICORN. Yup, they picked first letters wherever they pleased, used the whole ICO, and came up with unicorns.
If that doesn’t tell us something, then not sure what does. The unicorn’s aim will be to, according to AMF and the very rough translation:
“Offer these carriers of projects a frame, allowing the development of their operations, and to ensure the protection of actors and investors wishing to participate.”
It sounds like a sandbox for ICOs, which would be a first for a major country, but they don’t make it very clear it so is the case. Not that we’re complaining. We prefer unicorns anyway.
The regulator is also thinking of setting up a legal framework for ICOs, “in a forward-looking manner,” with three options on the table.
They might take a somewhat hands off approach and simply “promote a guide to good practice on a constant basis.” Probably based on their findings that “this type of fundraising is by nature intended for a technophile and knowledgeable public,” because:
“To subscribe to these operations requires a good understanding of the nature of these projects, the underlying technology and the associated risks.”
The second option is what would probably ensure no one chooses France for an ICO. That is: “Extend the scope of existing texts to apprehend ICOs as offers of securities to the public,” which we take it to mean treating them like IPOs.
Something we don’t think would make much sense as ICOs are usually at a much earlier stage than IPOs and far more comparable to Venture Capital investments.
The third option is to simply “propose new legislation adapted to ICOs.” A difficult task considering its very diverse nature, but potentially a reasonable option if it manages to strike the right balance.
The regulator is seeking public comments on the matter. And although the French are rightly very proud of their musical language, we should think comments in English might be accepted too. Going back to the unicorn, they say:
“As part of this innovative program, the AMF will receive the initiators (French or foreign entrepreneurs and their advisors) of different types of projects, which will allow it to deepen its legal and economic expertise of the operations carried out and their implications in the traditional economy.
The AMF also intends to encourage academic research on this subject and will publish a first impact analysis of these new forms of financing within one year.”
In short, it’s a sandbox unicorn. Perhaps. They might be following their cousins of sorts, Quebec, which has gained the honorable title of the first regulator to accept an ICO in their sandbox. Making that project the first regulated ICO in the world.