France became the first European Union country to craft bespoke regulations for digital asset/token offerings that are not based on past security laws. However, from the time the ICO regulations were enforced in 2019, the AMF has only approved and white-listed two Initial Coin Offerings (ICOs), with the WPO’s GreenToken ICO being the second.
France ICOs regulations
The French regulatory authority, the Autorite des Marches Financieres (AMF), started by conducting consultations on the risk, structure, volatility and applicability of coin offering in crowdfunding between mid-2017 and December 2017. This was after recognizing that digital coin offerings were becoming a global phenomenon and it did not want to be left behind as other countries around the world embarked on coming up with rules to regulate security tokens.
By fall 2018, a bill was tabled in parliament and it went on to be signed to law in early 2019, making France first EU country to have an ICO law in place. The law which is referred to as the Pacte Law (or Loi Pacte), regulates defines digital tokens and lays out regulations for ICOs and intermediaries providing services related to crypto-assets.
Under the Pacte Law (or Loi Pacte), ICO issuers can legally raise funds by conducting an online ICO. Then after issuing the digital tokens, the tokens can be listed on a crypto exchange to be traded. The ICO issuers are given the liberty to choose to register for a VISA with the AMF to be ‘white-listed’ or to simply proceed with their ICO without the VISA but after submitting a document of disclosure to the AMF to enable token buyers to make an informed decision regarding the ICO.
However, the AMF emphasized that:
Although this approval is optional and ICOs without AMF approval will, therefore, continue to be legal, only those public offerings that have received the AMF approval may be marketed directly to the public in France.
It is also important to note that the new rules only apply for utility tokens. Digital securities are regulated under the old/existing securities regulations
The role of the AMF in the ICO regulations
Under the Pacte Law, the AMF:
- Examines the disclosure document plus any advertising or promotional material that is circulated or published by the ICO issuer. The issuer should ensure that the disclosure document contains accurate, clear, non-misleading and detailed (outlining the risks that investors would face by purchasing the tokens) information.
- Verifies that the ICO issuer has adopted enough procedures to protect and track the funds raised in the ICO.
- Ensures that the issuer conducts themselves per the submitted disclosure document while complying with the regulations. If the issuer violates any of these, the AMF can compel the issuer to stop selling or offering the tokens, stop any advertising campaign and also remove its approval.
- Verifies that the issuer is a legal entity registered under the French law in France. The AMF can only issue Visas to French-based issuers. Foreign corporations and entities seeking ICO market in the French market are free to do so but without the approval of the AMF.
Once the AMF approves an issuer to conduct an ICO, the issuer gets a VISA and is added to the whitelist of the approved ICOs.
However, it is important to note that the AMF approval is not advisability of the project behind the ICO. The AMF does not verify the technical and financial elements of the project. It also does not verify the computer programs behind the blockchain project. Therefore, it is up to the investor to research these before investing in the ICO.
The first ICO approved by the AMF
The AMF approved the first ICO in December 2019. The ICO was a company called French-ICO that has a platform for funding projects through cryptocurrencies. The ICO was scheduled to start in March 2020.
The AMF Visa that the French-ICO was issued with expires on June 1, 2020.
The ICO targets a minimum of €100,000 and a maximum of €1 million. Once the offering is finished the tokens will be tradable on Zebitex, which is a partner exchange to the French-ICO.
The second ICO approved by the AMF
On May 12, 2020, AMF approved the second ICO, which was for a firm called WPO.
WPO is a renewable energy company that services over 600 solar parks and wind firms across Europe and outside Europe.
In the ICO, WPO is offering its GreenToken (GTK) with a minimum target of €1.5 million and a maximum target of €10 million. According to the firm, one token will be going for €95 and the minimum amount that an investor can invest is €100.
The ICO is scheduled to start on September 8, 2020.
In the future, the GreenToken could be used to acquire goods and services from the GreenToken Network, which taps into the renewable energy industries serviced by WPO.
The tokens are expected to start trading on the SAVITAR exchange, which is a French crypto exchange.