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ICO / token sale
Companies and projects have increasingly relied on the sale of digital assets, or tokens, as a means of fundraising. These tokens generally do not grant the holders an ownership interest in the issuing company or project, but may provide governance rights, access rights or other utility. This has been conducted through public sales known as initial coin offerings (ICOs), proliferation through token generation events (TGEs) or private sales, among other mechanisms.  While showing characteristics of traditional methods of fundraising, there are a range of unanswered questions related to the legal classifications of such products. As ICOs and TGEs will usually be distributed online and internationally, there is usually no single legal framework applying to such transaction, and the legal framework of each market in which the tokens may be offered or sold needs to be considered.


Attitude of the country towards ICOs/token sales

Prior to the entry into force of the law n°2019-486 dated 22 May 2019 about the growth and the transformation of business entities (“Pacte law”) in France, members of parliament were cautious about ICOs and token sale because of the ambiguity about applicable rules for ICOs, legal uncertainty, lack of information about issuers and more generally, lack of national or European supervision about ICOs (Impact assessment of the Pacte law dated 20 June 2018, p. 345 and seq.).

All of these elements generated a risk for individuals subscribing to ICOs. Considering the success of ICOs and the growth of this market notably in the years 2016 and 2017, the need for a legal framework for ICOs in France became more and more apparent. The difficulty, however, was to conciliate the need for a binding French legal framework for ICOs in order to protect individual investors and the cross-border nature of ICOs and the possibility for issuers to easily bypass French legal framework by issuing tokens in an unregulated country. 

The AMF launched a public consultation in order to assess the possibility to apply existing regulation to ICOs or to create an ad hoc regime for ICOs. The second assumption has been retained by the respondents who was in favour of an optional regime in order to avoid the disruption of this emerging market in France. The Pacte law has therefore created such optional regime for ICOs which is actually in force and aims to reduce politic and social reservations about ICOs / token sales.

Legal affairs

Presence of any explicit regulation on ICOs and the issuance of token/coins

Yes. Tokens (French “jetons”) and token issuance (French “offre au public de jetons”) receives a legal definition in accordance with article L.552-2 and L.552-3 of the CMF which include “utility tokens”. In accordance with article L.552-1 and seq. of the CMF, French utility token issuers may ask AMF to obtain an approval to their token issuance by filling a document of information (“whitepaper”) including some mandatory information. 

Securities tokens are however excluded from this regime and are issued in accordance with Regulation 2017/1129 of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market (“Propectus Regulation”).

Presence of any explicit restrictions on ICOs or the issuance, distribution and/or transfer of token/coins

Yes. Issued utility tokens without AMF approval cannot be freely marketed to potential subscribers and token issuers without approval are therefore subject to restrictive rules about banking and financial solicitation (French “démarchage bancaire et fin
ancier”) set out in article L.341-1 and seq of the CMF.

Obligations and requirements to issue token/coins

Issuance of tokens

The AMF approval is not defined as a license as it is not attributed to the issuer but to the issuance itself: the issuer can be an unregulated entity, but it must ask for an AMF approval for each utility token issuance if the utility tokens are intended to be marketed in France to individuals though direct solicitation. 

The regulation about this approval is set out in article L.552-1 and seq. of the CMF and completed by article 711-1 and seq. of the AMF General Regulation (“RG AMF”) and by AMF instruction DOC-2019-06 dated 6 June 2019 (“AMF Instruction”).

The AMF approves to the content of the whitepaper of the ICO. The whitepaper must include any of the mandatory information required by the RG AMF and by the AMF Instruction. Also, two kinds of measures have to be implemented by the issuers and demonstrated to AMF in order to obtain an approval: 

  • Anti-money laundering and counter terrorist financing (“AML-CFT”) measures in accordance with article L.561-1 of seq. of the CMF.
  • Asset monitoring and safeguarding system (e.g. an escrow agreement, a multi-signature scheme or an automated IT solution which is based on a shared electronic recording device).
The filling of an application to the AMF in order to obtain an AMF approval is free of charge and AMF must notify its approval (if the application file is completed) within twenty days from the date of its acknowledgement of receipt.

Trading of tokens

The trading of tokens for own accounts and the activity of token brokerage (i.e. service of reception-transmission of buy or sale orders on tokens) are not subject to a license as digital asset service provider (French “prestataire de services sur actifs numériques” - PSAN) rather than the operation of a digital asset trading platform (French “plateforme de négociation d’actifs numériques”) which is subject to such license in accordance with article L.54-10-3 of the CMF.

Classification of token/coins in the jurisdiction

Tokens/coins receive specific classification under French law:

  • Utility tokens are defined by article L.552-2 of the CMF as “any intangible asset representing, in digital form, one or more rights which can be issued, recorded, stored or transferred using a shared electronic recording device enabling the owner of the asset to be identified, directly or indirectly”. Only utility tokens issuances can be subject to an AMF approval in accordance with article L.552-1 and seq. of the CMF. Utility tokens are also included into the definition of a digital asset (French “actif numérique”) in accordance with article L.54-10-1 and seq. of the CMF which are subject to services on digital asset and to the French status of PSAN. 
  • Other tokens/coins (such as crypto currencies) are included into the following definition of a digital asset: “any digital representation of a value which is not issued or guaranteed by a central bank or public authority, which is not necessarily attached to legal tender, and which does not have the legal status of money, but which is accepted by natural or legal persons as a medium of exchange and which can be transferred, stored or exchanged electronically”. Such kind of token is not covered by legislation regarding ICOs as it does not match with the definition of utility token.
  • Se
curity tokens (i.e. instruments which fit with the definition of a financial instrument in accordance with article L.211-1 of the CMF, including capital shares, debt instruments, collective instrument schemes and financial contracts which are issued, recorded, stored or transferred using a shared electronic recording device) are subject to the legislation regarding financial instrument (including French legislation implementing Directive 2014/65/EU of 15 May 2014 on markets in financial instruments (MIFID II) and Prospectus Regulation).

Presence of a duty to publish a prospectus bevor offering token/coins to investors

The publication of a prospectus (“whitepaper”) and the obtaining of an AMF approval is optional but is mandatory if the issuer contemplates to perform acts of direct marketing of individuals in order to distribute the tokens. The AMF approval could also be considered as a way to demonstrate to potential subscribers that the terms and conditions of the issuance has been approved by the AMF as a guarantee of safety. 

Presence of AML/KYC requirements that are needed to be fulfilled regarding (i) the initial issuance of token/coins and (ii) any following transfer of token/coins to third parties

Token issuers which ask for an AMF approval must comply with AML-CFT requirements and implement AML-CFT procedures, only as part of the token issuance which is subject to the AMF approval and within the limits of the transactions with the subscribers participating in the offer (article L.561-2 7° of the CMF). 

Token issuers which do not ask for an AMF approval have nothing to implement in terms of AML-CFT rules, unless they belong to another category of entity which is subject to AML-CFT rules (bank, asset manager, insurance company etc.).

The AML-CFT measures to implement by token issuers are the following:

During the initial issuance of tokens

In accordance with the AMF Instruction, issuers must implement, inter alia:

  • A solution which allows the identification of potential subscribers to the tokens issuance (“KYC”) and the verification of the elements of identification;
  • A solution of AML-CFT risk assessment: the token issuer has to implement an organization, internal procedures (e.g. a risk classification procedure) and control device which are suitable to this AML-CFT risks
  • A solution which allow the issuer to comply with rules about freezing of assets (French “gel des avoirs”).

Following transfer of token to third parties

The measures to implement depend of the amount of tokens subscribed and the AML-CFT risk related to the transaction:

  • If the amount of tokens subscribed is less than € 1,000 and the transaction is not classified as involving AML-CFT risks (in accordance with the issuer’s risk classification procedure): AMF only suggests identifying the subscriber, but it is not mandatory by law;
  • If the amount of tokens subscribed is higher than € 1,000 or the transaction is classified as involving AML-CFT risks: the issuer must be identified, and his identity has to be verified with a written document with evidential value. 
If the token subscriber is not physically present at the time of the subscription, two complementary measures have to be implemented: 

  • The issuer must collect another ID document from the subscriber;
  • The subscriber must make a first payment of at least €1 in legal tender from or to a current account opened within a financial entity located in an EU/EEA member state or third country state implementing equivalent AML-CFT measur

Additional comments regarding (i) the legal situation for ICOs/token/coins and (ii) any following transfer of token/coins to third parties

The abovementioned regime will be amended upon the entry into force of the Regulation of the European Parliament and of the Council on Markets in Crypto-assets (“MiCA regulation”) which is still under discussion and in draft form.

Economic conditions

Market size for ICOs/token sales and existence of any previous regulated ICO/token sales in the jurisdiction

Official statistics about the number of ICOs in France are missing since the impact assessment of Pacte law in 2018, which reported that 7 ICOs have been launched since the middle of May 2018 for a total raised amount of nearly € 80 million and that 40 ICOs were intended to be launched in 2018 (French Government, Impact assessment of Pacte law project, 20 June 2018, p. 345).

As of 13 October 2020, only three ICOs obtained AMF approval. Since then, AMF has not communicated about any other approval which would have been granted. 

Additional comments regarding the economic situation for ICOs/token sales or what companies must be aware of in this business area

As observed by the Chairman of the AMF on 25 October 2021, the popularity of utility tokens is in decline compared to non-fungible crypto-assets (“NFTs”) whose market is growing. The latter notably explains that the AMF approval regime from Pacte law was not as successful as expected.



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