The French National Assembly’s Finance Committee has issued a report on cryptocurrency and blockchain sectors in the country.
The report’s introduction is written by Committee president Eric Woerth, who urges the country to continue refining regulations governing the sector.
He also argues against promoting cryptomining in France and calls out the negative environmental impact of that industry.
Woerth also proposes that France should require “systematic registration” of anyone using Monero, PIVX, DeepOnion, Zcash, “anonymous” cryptocurrencies named by Woerth in the introduction.
Woerth begins by describing the current diminished scope of the global crypto market cap, which has fallen from around $800 billion in December 2017 to, in $120 billion in January of this year.
While regulators have become increasingly responsive to events in crypto, Woerth says many aspects of the crypto realm, “remain hidden, non-transparent and opaque…” and wheat must be separated from chaff.
The Committee President says he believes that cryptos or the tech they imply (“blockchain”- a disputed term) could render financial transactions more efficient.
Transactions in standard banking, he says can involve, “up to forty intermediaries – individuals, insurers, banks, customs, maritime operators, etc.”
Banks and industry pundits, however, have also disputed that contention, and have said that it is not a technology that slows cross border money transfers.
Slow international money transfers, rather, more often occur as a result of having to navigate multi-jurisdictional regulations pertaining, for instance, to anti-money laundering controls.
Woerth does take issue with one “rapporteur” who has advocated for the crypto sector during, “a joint fact-finding mission between the Commission Finance, the Committee on Economic Affairs and the Law Commission.”
That rapporteur said Woerth, conflated regulation of cryptocurrency use with the suppression of the development of “blockchain” technology:
“…(W)e can legally favor the blockchain and condemn at the same time the release of crypto-assets deliberately aimed at maintaining anonymity of their holders and thus serve as a ‘cache’ for traffic of all kinds…(and) build a fair and proportionate regulation.”
He says that the “thorny” matter of regulation must carefully consider crypto token and cryptocurrency’s purported use, which Woerth has determined has primarily involved their use in speculation:
“The number of (cryptocurrency) transactions involving goods and services
remains extremely low, in particular because of the high volatility…We are thus obliged to agree that the transactions on Crypto-assets are essentially made for the purpose of speculation.”
He also questioned whether cryptocurrencies have improved the financial prospects of the general public:
“As to role played by the crypto-active ones over the whole architecture of the system of payments, their great diversity and their volatility do not seem to be able to contribute to a stabilization of the system. They could, on the contrary, (pose) a significant risk to the financial system…”
Woerth applauds a proposed visa system by AMF (the French Monetary Authority) to issue an ICO, which he says could help visa-approved projects secure banking relationships.
He also gave an approving nod to France’s current tax-treatment of cryptos, whereby returns are taxed when monies “repatriated” to a bank account.
Like St Louis Fed Chairperson Mike Bullard has done before him, Woerth critiqued the practicality of plural-currency systems espoused by crypto enthusiasts, saying the ethos is, “reminiscent of
periods of currency competition (such as the period of free banking United States in the second half of the nineteenth century), which involved costs of transaction, the absence of a lender of last resort, the holding of multiple accounts and a fragmentation of trade.”
Instead, like Bullard, Woerth praised:
“Currencies modern…(and) unified national systems under the authority of a central bank, despite their fault…(which) have been a major advance over the reign of currencies private. Without this unification of the currency, economic development would have been slower.”
He characterized the what has essentially be the fragmentation of money into multiple speculative instruments as regressive:
“Fighting the excesses of today’s finance should not back straight into the nineteenth century…The experience of free banking has showed that a monetary system needed coherence to function well.”
Woerth also took issue with the “rapporteur’s” proposal that the industry and its users should be granted special consideration, including tax consideration:
“…(W)hen he proposes not only not to limit the investment in crypto-active regulated actors but also
Exempt crypto-asset purchases from any taxation, within a limit of 3,000 euros a year, that would amount to a parallel payment system, possessing undue advantages.”
Woerth said that typically “libertarian” crypto entrepreneurs may be asking society to bear the risk of their speculating:
“It does not seem necessary either, as suggests the report, to guarantee a right to the account to any entrepreneur in crypto-assets, (to) transfer the financial risk they run to the national community.”
Woerth even suggested that ICO’s could be tied to a central bank cryptocurrency rather than a “decentralized” cryptocurrency like Bitcoin, something that might lend financial stability to ICO projects (if and when valid- also a matter of contention):
“(With) a ‘central bank’ digital currency, the conversion rate of which…would be fixed and the issue legitimate and guaranteed…The hazard price volatility would be greatly reduced, and the use of blockchain could be improved in many areas. It would be especially much easier and much more transparent for the organization ICOs and for the financing of these companies.”
Woerth also reminds readers that they, “Must (remain) aware of the problems…tax evasion, money laundering…fraud…energy consumption,” associated with crypto. He then poured cold water on the notion of making France becoming a haven for crypto mining:
“On this last point, I do not share either the Rapporteur’s proposal to attract mining centers in France by
considering as electro-intensive enterprises.It has absolutely no vocation to attract multiple mining farms here…Iceland’s energy consumption has doubled since the arrival on his soil of these “miners”…Some of them are going to become established in Ukraine or in other countries in which electricity generation is based mainly on coal…”