France has issued its strongest warning yet on the future of crypto regulation in Europe, saying it may attempt to block some crypto firms licensed in other European Union countries from operating domestically, according to a Reuters report.
The move reflects growing concern that uneven licensing standards across the bloc could expose investors and markets to risk.
Marie-Anne Barbat-Layani, president of France’s securities watchdog, the Autorité des marchés financiers (AMF), told Reuters that the country wants oversight of the industry to be transferred to the European Securities and Markets Authority (ESMA) in Paris. The statement follows calls from Italy and Austria for a more harmonized approach to supervision of the crypto sector.
MiCA Passporting Sparks Debate
The EU’s Markets in Crypto-Assets (MiCA) regulation, which came into force earlier this year, allows crypto firms to apply for licenses in one member state and then use that approval to operate across the bloc’s 27 countries—a process known as “passporting.”
While the framework encourages consistency, regulators and policymakers have warned that it may create loopholes. Some jurisdictions are applying looser standards, potentially allowing firms to shop around for the easiest route to approval before expanding operations across Europe.
Barbat-Layani explains that this oversight patchwork raises questions about whether companies are adequately supervised as they scale cross-border operations.
The “Atomic Weapon” Option
In a sign of France’s willingness to act unilaterally if needed, the AMF told Reuters it would not rule out challenging the validity of licenses granted elsewhere in the EU. Such a step would undermine the principle of passporting, which has long been a cornerstone of Europe’s single financial market.
“We do not exclude the possibility of refusing the EU passport,” Barbat-Layani said. “It’s very complex legally and not a very good signal for the single market—it’s a bit like the ‘atomic weapon’ … but it’s still a possibility we hold in reserve.”
The AMF did not specify which firms might face scrutiny or under what criteria their licenses could be rejected.
A Key Juncture for Crypto Oversight
At stake is the stability of a global crypto industry worth trillions of dollars. Regulators worldwide have repeatedly warned that inadequate oversight could trigger financial instability and harm retail investors.
By pushing for ESMA to take over supervision of the largest crypto firms, France and its allies are indicating that national approaches may not be sufficient to address the risks.
Whether other EU members agree to hand more power to the bloc’s central regulator will determine how Europe balances innovation, investor protection, and market stability.
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