Why France Is the Best Place to Do an ICO
After more than two decades of Silicon Valley tech domination, the global cryptocurrency boom is starting to level the playing field. Despite the bear market, European Initial Coin Offerings (ICOs) have reached more than $4B in value so far, a figure US and Asian ICOs haven’t even come close to this year. France in particular is a great place to do an ICO.
Blockchain is a truly global phenomenon, so when my startup was looking for a place to incorporate, we had a lot of options. But we chose Paris. Our main priority was making sure that our country of incorporation would not make life difficult for blockchain startups and that corporations in our region were open to experimenting with decentralized ledgers.
France may not seem like the most obvious haven for crypto startups. The country has long struggled to connect a history of academic excellence in mathematics and engineering to world-class technology. Entrepreneurship has not always been popular in France, and in my observation, there is often a sense of negativity that prevents people from taking on new initiatives. Over the past years the French government has set out to reduce bureaucracy, streamline access to capital and get rid of the cultural issues that were crippling the country’s ability to shine on the global stage.
The creation of La French Tech initiative, a movement celebrating French innovation, startups and the people behind them, epitomizes France’s desire to become a tech hub. Along with supporting Made in France ventures, officials have also adapted the legislation to create a much more welcoming environment for foreign companies. Business France, the French Government’s Economic Development Agency, has been enabling Silicon Valley-based startups to easily open offices in France. These efforts have paid off. At last year’s Consumer Electronic Show, a third of all the international companies showcased were French.
When the cryptocurrency market became too big to ignore, catering to blockchain entrepreneurs was added to the agenda of France by government officials. In the crypto realm, France is home to Ledger, and hosts numerous other promising infrastructure, platform and software projects such as iExec, Ark, and Blockchain.io, the highly-anticipated cryptocurrency exchange.
A year ago, the Autorité des Marchés Financiers (AMF, the local stock market regulators), initiated the UNICORN program. UNICORN was a consultation on Initial Coin Offerings during which stakeholders from around the country were invited to share their views on the proper way to analyze and support ICO initiatives.
An initial, high level assessment revealed three major ways to move forward in terms of regulation: Promoting best practices without changing existing legislation, extending existing texts to treat ICOs as public offerings of securities, and proposing ad hoc legislation adapted to ICOs.
Shortly after UNICORN, France’s Minister for the Economy and Finance established a cryptocurrency task force to act on the consultation findings. The result of this effort was recently announced: a surprisingly progressive ICO regulatory framework was amended by the French parliament as part of PACTE, France’s Business Growth and Transformation bill. Among other regulatory perks, eligible cryptocurrency companies seeking to launch an ICO can now apply for an ICO visa by submitting their white paper to the AMF for review.
With its newfound power, the AMF is able to give ICO projects a public stamp of approval, making them appear more trustworthy. Visa holders will also be entitled to guaranteed access to banking services. Bruno Le Maire, Minister of the Economy and Finance, even said ICOs will help France become a leading blockchain nation, and PACTE is a major step in that direction.
From the moment UNICORN was announced, it became apparent not only that a cryptocurrency-friendly mentality was steadily developing in France, but also that a local, regulated ICO would be a viable way for us to accelerate our growth.
At the end of the day, many projects base their choice of local jurisdiction based on what is considered a security token, and what is considered a utility token. True utility tokens face fewer legal and regulatory barriers, which is why many projects like to advertise themselves as utility tokens even when they clearly are not. The larger problem is that many jurisdictions are sending unclear signals about what is a security and what is a utility, which is one of the reasons why some projects are playing it safe by doing Security Token Offerings (STOs).
France, by contrast, is relatively willing to classify tokens as utilities. After we learned that French regulators designated our own token as a utility, for example, we felt much more comfortable about doing an ICO.
But why do an ICO at all? As a bootstrap company, we were looking for an effective way to get noticed, scale our operations globally and confidently tackle the performance and customer management market. Crowdfunding allows us to shed light on what we’ve been doing for the past few years. Public scrutiny also helps us identify issues with the platform. To some extent, France’s friendly regulatory environment opened up that door for us. Regulation can actually drive disruption.
Wilhem Pujar is co-founder and CEO of Stacktical.