FRANCE Law and Practice Contributed by: Hubert de Vauplane and Hugo Bordet, Morgan Lewis & Bockius LLP
5.2 Regulation of Cross-Border Payments and Remittances
In view of this trend, Regulation (EU) 2020/1503 introduced a different regime depending on whether the funding is provided by a sophisti - cated or unsophisticated investor. 4.4 Syndication of Fiat Currency Loans No syndication of loans originated through crowdlending platforms is allowed under French law.
Cross-border payments and remittances are included in the list of payment services and therefore are regulated as such, as soon as they involve the use of funds. 6. Marketplaces, Exchanges and Trading Platforms 6.1 Permissible Trading Platforms The French regulation of trading platforms most - ly replicates the taxonomy established by MiFID II. French law distinguishes three categories of trading platforms, in accordance with MiFID II: regulated markets, multilateral trading facilities (MTFs and organised MTFs), and organised trad - ing facilities (OTFs). Firstly, all these trading platforms are subject to the same set of common rules, which include, notably, the prohibition of proprietary trading and various organisational and transparency requirements. Thereafter, the main differences between regulated markets, MTFs and OTFs may be broadly described as follows: • Regulated markets are authorised by a gov - ernment decree (on a proposal from the AMF) and are operated by a market undertaking ( entreprise de marché ). • MTFs and OTFs may be operated by a mar - ket undertaking or an ISP. • Organised MTFs are MTFs which are subject to additional regulatory requirements. This category is not present in MiFID II; it was cre - ated by the French legislature. • OTFs may not list shares; they may only list the following asset classes: debt securities, structured finance products, greenhouse gas
5. Payment Processors 5.1 Payment Processors’ Use of Payment Rails
The definitions of payment services and pay - ment transactions under French law are broad and cover most existing payment methods. The French Monetary and Financial Code defines what payment services and payment accounts are, rather than how a payment transaction must work from a technical point of view. Therefore, regulated payment processors (ie, payment service providers) should have the ability to use technical innovations to develop new payment methods within the scope of the existing regula - tion. The regulation of payment services revolves around the notion of “funds” , which are defined as bank notes, coins, scriptural money and elec - tronic money. A payment method which does not use funds, but rather unregulated units of value (such as cryptocurrencies), might therefore fall outside the scope of the regulation. However, most payment operations involve a transfer of funds between two payment accounts. Therefore, any payment method implemented by a fintech start-up needs to be compatible with the technical requirements of the entity in whose books the beneficiary’s account is opened.
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