The French Binance License: Is Paris Planning to Become Europe’s Crypto Hub?

Crypto regulation is probably the most important topic of discussion across the global financial ecosystem these days. Amid LUNA and UST crashes, the need for a clear crypto regulatory framework is now more than ever before. France, the second-largest economy in Europe with a GDP of more than $2.5 trillion, has witnessed a jump in the adoption of digital currencies in the past few years.

Due to the potential of France as an economic power, Binance, one of the biggest crypto trading platforms in the world, accelerated its efforts to provide digital asset services in the region under a regulated environment. As a result, the company acquired a Digital Asset Service Provider (DASP) registration by the AMF during the first week of May 2022. The registration allows Binance France to expand its operations in the country.

While the economic power of France is evident, its potential as a financial hub has always been debatable. Compared to other European financial centers like London, Zurich and Frankfurt, Paris failed to gain the attention of large financial services providers, including brokers, asset managers and exchanges. Despite the reason that David Princay, the CEO of Binance France, called the recent DASP registration a 'key milestone' for the crypto ecosystem in Europe, analysts remained skeptical about the country’s potential as a crypto hub.

“To be honest, I don’t see Paris as a future crypto capital as it has never been a big financial hub. When it comes to forex, France is one of the most old-fashioned countries. Unlike Germany, the UK, Italy, Sweden, Poland and even Spain, France has never needed to be a very developed country in terms of using financial instruments,” said Daniele Casamassima, the Chief Executive Officer at Pure.

French License

Maria Stankevich, the Chief Business Development Officer at EXMO, believes that the French license is not number one in the region. According to her, to expand its operations in the EU, Binance needs to develop banking relationships.

“First, I am 100% sure that the fact that Binance managed to get this license and that they've invested 100 million euros in the French crypto economy are 2 connected facts. CZ said that France is uniquely positioned to be the leader of this industry in Europe, which is completely not true. France is a great crypto hub and I honestly admire the speed of adopting crypto there, but let's be honest, French license is not number one and not even top-5 on the current market,” she said.

However, the Chief Business Development Officer at EXMO, said that the DASP registration will help Binance create more jobs in the country and that will ultimately benefit the overall economy.

Crypto Clarity Drives Adoption

The adoption of financial instruments is directly related to the regulation in a particular region. In the case of crypto, a clear crypto regulatory framework has become the need of the hour.

“It is very positive that France as one of Europe's largest countries grants the license to crypto exchange. We have been regulated under MFSA (Maltese Financial Service Authority) for the past few years and understand how important regulation is for this space. This paves the way for massive adoption if there is clarity on trading cryptocurrency,” Jimmy Zhao, the Founder & Chairman of ZBX crypto exchange, commented.

Paris Faces Challenges

If we talk about the FX/CFD market in France, the number of active traders is way lower than in some of the neighboring countries like Germany. According to the data released by Investment Trends, nearly 38,000 French retail traders were trading in leveraged OTC Markets by June 2021.

As far as the crypto market is concerned, the adoption of digital assets has increased in France. However, compared to cities like Zurich and Frankfurt, the adoption rate is still lower in Paris.

“Take a look at where the main Forex brokers are opening their offices: it’s never Paris or any other part of France. If you analyze the financial companies, you will see that the biggest ones are never from Paris. Even in terms of the number of clients, it’s not the main region. So, I don’t see Paris as a new crypto financial hub. Germany, Estonia, Lithuania and other countries would suit that role better. They're more crypto-friendly and going to make stronger regulations,” Casamassima added.