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1) Blockchain, Bitcoin, what is it?
2) Evolution of the legal framework
3) The development of the blockchain industry in France
4) Issues and Initiatives
On October 10, 2017, the Ministry of Economy and Finance classifies Bitcoin in its list of alternative means of payment. This decision comes more than 3 years after the inauguration of the first crypto currency exchange counter in France, La Maison du Bitcoin (opening May 13, 2014).
These two pieces of information are revealing of the evolution of the situation of crypto currencies and more generally of the blockchain sector in France. Initially a marginal technology reserved for a small number of enthusiasts (cypherpunk and crypto anarchist movements) when it was created in January 2009 in the United States, blockchain technology has experienced a growing development and success throughout the world until it has become a subject of concern for many companies, governments and individuals.
1) Blockchain, Bitcoin, what is it?
First of all, it is important to differentiate between crypto currency and blockchain.
A crypto currency is a decentralized digital currency that uses cryptographic functions to perform transactions.
The blockchain is a network operating in a decentralized way to transmit information between users of the blockchain network concerned.
In other words, a cryptocurrency uses a blockchain network as its medium and cannot operate without it. On the other hand, a blockchain network can be used for other purposes than crypto-currencies.
It is because of its unique security and decentralization properties, combined with the very high adaptability of this technology that the Blockchain has gradually come to the forefront.
In this article we will try to clarify the situation of the Blockchain sector in France and its potential for the year 2020.
2) Evolution of the legal framework
2.1) Difficult beginnings
Initially linked to the use of Bitcoin and its derivatives, Blockchain technology was very heavily regulated. In January 2014 the Banque de France sets the framework within which Bitcoins can be sold; they can be exchanged against fiat currencies (traditional currencies: €, $, £...) only if the organisation selling Bitcoins is a payment service provider approved by the Banque de France.
However, the very operating principles of blockchain technology, namely decentralisation, transparency, its immutability and the absence of a central authority, make it difficult to regulate this sector, as many of the components of this technology are accessible to anyone with an Internet connection and can be freely consulted.
As soon as a legal framework was established, some companies decided to specialise in this sector at an early stage, whether it be for strategic advice on the use of blockchain technology or to provide crypto-currency payment means to individuals and companies.
2.2) 5 years later
French financial and governmental authorities are beginning to fully regulate the sector. Thus, in January 2018 the Ministry of Economy and Finance launched a first mission on crypto-currencies, four months later in April 2018 the Conseil d'Etat classifies the results of the sale of bitcoins and this will finally lead to the adoption of an article of law by the National Assembly on September 28th which sets up a visa for issuers of new crypto-currencies in the form of fund raising in digital assets (ICO: Initial Coin Offering).
In 2019, the blockchain is a sector in full development and occupies a significant place in the new technologies industry. The Minister of the Economy Bruno Le Maire intends to affirm to the players concerned the State's support for the blockchain sector. This will be achieved through flexible regulations.
Bruno Le Maire is going to propose to his European counterparts the establishment of a single European framework and to place France in the camp of proactive States in terms of regulating the sector.
With the aim of betting on decentralisation to counter the quasi-monopolistic situation of the giants of the digital economy, the government aims to make France a leader in the blockchain and crypto-currency economy.
3) The development of the blockchain industry in France
3.1) The blockchain for large companies
The characteristics of blockchain technology and smart contracts are of interest to players in banking and insurance, but also to the legal profession. In the future, these players will be able to certify transfers of ownership more securely or pay out compensation automatically.
Axa was the first insurer to release a block-based insurance. In September 2017, it launched an automated insurance for aircraft flight delays. Based on the Ethereum blockchain, this insurance is in fact a 'smart contract' which triggers an automatic reimbursement once the delay has been noted.
On the banking side, many projects are underway. For example, UBS and IBM have launched an initiative to design a trade finance platform based on the blockchain. Called Batavia, this technology would allow banks and their clients to automate this process, which is still very manual. The blockchain will also make it possible to settle transactions in real time and to have 'greater transparency of the exchange rate applied to the transaction and a reduction in structural costs', according to a Crédit Agricole press release.
3.2) But also for smaller companies
Alongside large companies developing in-house solutions based on blockchain technologies, several companies have emerged that are entirely dedicated to the use or application of so-called 'distributed registry' technologies. The Direction Générale des Entreprises (DGE) has identified 200 active or ongoing projects in the field of blockchain in France. This ecosystem includes both technology consulting firms, such as Blockchain Partner, which has worked for the Banque de France and the National Frequency Agency (ANFR), and crypto-sphere startups, such as the Coinhouse and Paymium crypto-actives buying and selling platforms, the manufacturer of electronic wallets for private key access accounts in crypto-currency Ledger.
Other start-ups have designed solutions for businesses, such as Lille-based Utocat, in which BNP Paribas has invested, and Paris-based Stratumn, financed in particular by CNP Assurances, which works with Axa Partners.
At BPIFrance, Philippe Mutricy, director of evaluation, studies and forecasting, considers the figure of 200 to be in line with the 150 financings carried out to date by the Banque Publique d'Investissement in the sector, via its innovation support mechanisms. The French ecosystem has more or less fifty startups in the block, with a high mortality rate, which is normal for an emerging technology.
4) Issues and initiatives
Today, the challenge of blockchain technologies remains their mass industrialization and the broad appropriation of their uses. To do this, it is essential to promote a positive understanding of these technologies, beyond the image of bitcoin and crypto-currency. Showing their reality and sometimes their risks is a good way to accompany the inevitable rise of these technologies by educating their users.
There are also several groupings of companies to create common initiatives in the blockchain sector. These initiatives may or may not be commercial in nature, but their mission is to advance the use of blockchain technologies in France. The FD2A association brings together some thirty companies with the aim of creating a network of professionals to promote the use of blockchain and to participate in debates related to these technologies.
Written by Axel Baechelen COO & Co-Founder
Cartam : Free marketplace for cryptocurrency users
