France Battles Crypto Influencers and Unregulated Platforms
France, known for its stringent cryptocurrency regulations, is facing a growing challenge: the proliferation of unregulated platforms and influencers promoting risky investment strategies.
The latest example involves a French YouTube channel with over 62,000 subscribers, advising viewers on cryptocurrency investments.The channel, run by a Spanish company, was recently ordered by the French Directorate General for Competition, Consumer Affairs and the Repression of Fraud (DGCCRF) to remove links to Bitget, an unauthorized trading platform operating illegally in France. Bitget allows users to bet small sums and speculate on substantially larger amounts, attracting those seeking quick riches.This case highlights the difficulty French authorities face in regulating the crypto space. While France boasts some of the world’s strictest cryptocurrency regulations, the decentralized nature of cryptocurrencies and the use of foreign platforms pose significant hurdles.
Thousands of self-proclaimed experts on social media platforms like YouTube, Instagram, and TikTok offer advice on investing in one of the 9,000+ cryptocurrencies available. These influencers often use compelling graphics and promises of quick returns to lure in unsuspecting investors. Some even promote cryptocurrencies based solely on celebrity names,such as “Trump Coin” or “Hawk Tuah,” further blurring the lines between legitimate investment and outright scams.
Since June 2023, the DGCCRF has been actively targeting influencers promoting unauthorized products, even those based abroad, who target French consumers. Violators face hefty fines of up to €100,000.
The Financial Markets Authority (AMF) has also taken steps to combat the proliferation of unregulated platforms. In 2022, the AMF created a “Black List” of 5,000 unauthorized platforms and offers. However, a “White List” of authorized platforms remains limited, with only a handful of sites meeting the stringent requirements.The European union’s Markets in Crypto-Assets (MiCA) regulations, inspired by French practices, came into effect in December 2023, further strengthening the regulatory framework.
Despite these efforts, financial scams targeting cryptocurrencies have surged since mid-2023. The average reported loss amount for all scam themes combined reached €29,000 by the end of November, according to the AMF.
French crypto Market Struggles as Users Flock to Foreign Platforms
A growing number of French citizens are turning to foreign cryptocurrency platforms, leaving the domestic market struggling to compete. This trend, according to industry experts, is fueled by stringent regulations and high compliance costs that are pushing French companies out of the market.
A recent survey by BVA XSight, commissioned by the French financial markets authority (AMF), revealed that 3.2% of French adults have fallen victim to financial investment scams, a threefold increase from 2021.The survey also highlighted a concerning trend among young men, with 45% of those likely to be scammed falling within the under-35 male demographic. This group appears especially susceptible to get-rich-quick schemes often promoted in the cryptocurrency space.
Adding to the complexity, a 2024 Ipsos KPMG study found that 12% of French people now hold cryptoassets, a significant jump from 9.4% the previous year. This surge in adoption is largely driven by younger generations, particularly men, who are drawn to the perceived ease of access and anonymity offered by decentralized platforms.
Alexandre Stachchenko, CEO of Paymium, the only French cryptocurrency exchange registered with the AMF, expressed his frustration with the current situation. “Today, the French favor platforms located outside of France,” he stated. “With just three or four foreign platforms, we already account for 70% of owners.” Stachchenko believes that the AMF’s stringent regulations, designed to protect consumers, have inadvertently stifled the growth of the French crypto ecosystem.
“We prioritized standards above all else, wanting to protect consumers,” Stachchenko lamented. “But we didn’t realize that these standards would kill the French ecosystem. We are the only exchange platform left in France because the others have either shut down or given up.”
He further pointed out the significant financial burden imposed by the MICA regulations, which require companies to invest one million euros to comply. This barrier to entry has effectively priced out many smaller players, leaving the market dominated by foreign giants.
hasheur, a prominent cryptocurrency influencer in France, echoed Stachchenko’s concerns. “The regulator prohibits hazardous practices, but suddenly, the French will do it among the Americans,” he remarked. “We try to protect consumers from themselves, but the result is that they ignore the French market and turn to international platforms. So the user runs approximately the same risk, and we only silence the French companies. It’s unbalanced and unfair.”