France Threatens to Block EU Crypto Licenses in MiCA Clash

MiCA, which formally entered into force this year, was designed to establish a common framework for crypto-asset service providers across the EU. One of its cornerstone provisions allows firms licensed in one member state to operate across the entire bloc, a process known as “passporting.” In theory, this ensures efficiency, legal certainty, and equal access to markets. In practice, however, France’s financial regulator, the Autorité des Marchés Financiers (AMF), has raised alarms that some firms are choosing jurisdictions perceived to apply lighter oversight in order to benefit from easier licensing, according to Reuters. Officials fear that uneven enforcement risks undermining the entire project by exposing investors to fraud or weak governance standards.

The AMF and its counterparts in Italy and Austria argue that national differences in how MiCA is being interpreted have already become evident. These inconsistencies, they warn, could erode public trust in the regime before it has a chance to take root. To address the problem, the three regulators are pressing for stronger European-level supervision, with the European Securities and Markets Authority (ESMA) taking direct responsibility for overseeing major crypto companies. The French regulator has even suggested it may refuse to recognize certain licenses issued elsewhere in the EU if those licenses are deemed to have been granted under standards too low to ensure safety.

ESMA, for its part, has publicly stated that it is working intensively to guarantee consistent authorisation and supervision across all member states. The authority has previously urged lawmakers to consider more centralized oversight, noting that crypto markets, by their nature, operate across borders and therefore require coordination that national authorities may struggle to provide. The current dispute appears to reinforce ESMA’s case that systemically important firms cannot be effectively regulated by individual member states acting alone.

The French, Italian and Austrian regulators have already circulated a position paper that goes beyond the question of passporting. The document proposes a series of amendments to MiCA itself. Among the reforms, the paper calls for stronger rules governing crypto activities originating outside the EU but directed at European investors, tighter cybersecurity supervision of platforms and custodians, and more rigorous disclosure and approval processes for token offerings. In each case, the aim is to prevent loopholes and harmonise standards so that no single jurisdiction can become a weak link in the chain.

If France were to carry out its threat to block passported licenses, the implications would be significant. Crypto companies licensed in jurisdictions regarded as lenient could find themselves excluded from key markets, forcing them to seek new authorizations in stricter states such as France or Germany. This would raise compliance costs, delay the launch of services, and create uncertainty for firms attempting to expand across the bloc. For investors, tighter oversight could enhance protection by reducing exposure to under-regulated operators, though it may also limit the variety of services available or increase costs passed on by firms.

The challenge for the EU is balancing national concerns with the principle of the single market. If member states begin rejecting each other’s licenses, the credibility of the entire passporting framework could be undermined. That, in turn, would weaken one of MiCA’s chief attractions: the promise of a truly integrated European market for digital assets. French officials acknowledge that refusing a passport could send what they call a “bad signal,” but insist they are prepared to keep the option on the table as leverage.

Legal experts note that MiCA does not explicitly empower national regulators to block passporting at will, which means any such move could lead to litigation at the European Court of Justice. Altering the framework to transfer oversight of large crypto firms to ESMA would require political consensus among member states and formal legislative amendments at the EU level, a process that could take years and provoke resistance from states wary of ceding regulatory sovereignty.

The dispute underscores a broader global debate about how to regulate digital assets. Around the world, governments are attempting to balance innovation and competitiveness with risks ranging from market volatility to money laundering. The EU positioned MiCA as a pioneering attempt to bring clarity and consistency, but its rollout illustrates the complexities of translating regulatory ambition into practice. As crypto markets mature, pressure will only increase on authorities to ensure that firms operate under rules that are both uniform and credible.

The outlook depends on whether France and its allies can persuade other member states to accept stronger centralised supervision. If they succeed, ESMA could gain new authority over the largest players, reshaping the regulatory landscape in Europe. If they fail, national regulators may increasingly take matters into their own hands, raising the prospect of fragmentation. For crypto firms, the message is clear: compliance strategies must be robust, transparent, and capable of withstanding scrutiny not just from one regulator but from an evolving European system that is still searching for its balance between unity and sovereignty.