French Central Banker Warns Complex Crypto Regulations Could Create ‘Uneven Playing Field’

The governor of France’s central bank, François Villeroy de Galhau, has urged EU regulators to “avoid adopting diverging or contradictory regulations, or regulating too late.” He warned that “To do so would be to create an uneven playing field, risking arbitrage and cherry picking.”

Banque de France Governor François Villeroy de Galhau talked about cryptocurrency regulation at a conference on digital finance in Paris Tuesday. The French central banker stressed:

We should be extremely mindful to avoid adopting diverging or contradictory regulations, or regulating too late. To do so would be to create an uneven playing field, risking arbitrage and cherry picking.

Villeroy de Galhau added that “unduly complex” crypto regulations could fall short of investor protection and money laundering prevention.

The European Commission introduced the Markets in Crypto Assets Regulation (MiCA) bill in September 2020 as part of its digital finance strategy to bring crypto assets, issuers, and service providers across the EU under one regulatory framework. The European Parliament and Council reached a provisional agreement on the MiCA bill on June 30, but MiCA is not expected to be implemented until 2024.

The European Central Bank (ECB) outlined in August its plan to harmonize the regulatory framework governing crypto activities and services in the EU. “There is currently no harmonized regulatory framework governing crypto-asset activities and services in the EU,” the regulator explained, adding that banks are increasingly considering whether to offer crypto products and services, and it is the ECB’s role to “ensure they do so safely and soundly.”

The European Securities and Markets Authority (ESMA), the EU’s top securities markets regulator, warned in May that soaring inflation may drive retail investors into cryptocurrencies. ECB Vice President Luis de Guindos said Monday that eurozone inflation is becoming increasingly broad while growth is weakening. “We are seeing that in the third and fourth quarters there is a significant slowdown and we may find ourselves with growth rates close to zero,” he detailed.

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