Keep out Crypto from Financial institutions: says France’s Central Bank
In a report announced at the start of March, the Bank of France proposes to prohibit insurance companies, banks and trust organization from “participating in deposits and loans in crypto-assets.” It also advocates banning all marketing of “crypto-assets” savings products to the public, save for the “most informed investors.”
The report, which gives a review of the technology and recommends strict regulation arrangement, claims that cryptocurrencies do not constitute money and underline that they are not legal tender.
The document labels them despite as a medium of cyberattacks, money laundering, and terrorism funding.
The author claims:
“Very little value is expressed in these crypto-assets.”
They comment further:
“The anonymity that characterizes the means of production and transfer of the majority of crypto-assets favors above all a risk of them being used to criminal ends (sold on the internet for illicit services or goods) or used to the end of money laundering and the financing of terrorism.”
Resounding other pundits, the report also dismisses the recent run-up “the price of crypto-assets” as a “speculative bubble” similar to the “tulip mania” period in the Netherlands from 1634 to 1637.
As for the central bank’s proposed regulatory structure, it indites that its priority is to institute anti-money-laundering (AML) and to combat the financing of terrorism (CFT) measures, which would be accomplished by growing the European Union’s Fourth Anti-Money Laundering Directive.
It likewise expressed worries about investors security and “cyber-risk” and advised that the crypto industry’s “boom in activity”could destabilize financial markets.
The report’s first proposal is to “regulate the services offered at the interface between the real economy and crypto-assets”- meaning primarily that crypto trades should be considered as payment services providers and should be liable to similar legal requirements.
The bank goes ahead to propose strict control of crypto-asset investment, including the previously mentioned restriction of banks, insurance companies, and trust companies from dealing in crypto deposits and loans, and marketing restriction associated with savings products.
It likewise writes that it concurs with the recommendation of France’s Stock Market Regulation, the Autorite des Marches Financiers (AMF), that cryptocurrency derivatives should not be marketed to the public.
The bank shuts its report with a plea to worldwide regulators to order “international-level” measures to supervise crypto-assets, contending that an absence of coordination could undermine the sufficiency of any national-level action.
The document finishes up:
“Considering the immaterial nature of crypto-assets and the use of internet related technologies that facilitate cross-border services. The heterogeneity of national regulations could prevent comprehensive supervision of the risks at hand.”