The introduction of the Markets in Crypto Assets (MiCA) regulation has brought a sense of cohesive direction to the European crypto industry. Where crypto assets had previously existed in a gray area, with firms and investors grappling with varied regulatory frameworks on a country-by-country basis, MiCA now promises widespread harmony.

Expected to be fully implemented by the end of 2024, MiCA regulations will influence and drive the dynamics between governments, communities and projects over the next 18 months as the Web3 scene continues to evolve and innovate. In the lead up to MiCA’s full implementation, we can expect to see the EU – and France in particular, for reasons mentioned below – as a core hub of this progressive movement.

Ken Timsit is the managing director of Cronos Labs.

With Paris recently hosting the sixth annual EthCC, the first since the introduction of MiCA, this year’s iteration also feels especially significant in line with the recent surge in President Macron’s efforts to make France fertile ground for Web3 enterprise. Having already inspired Circle, Binance and Crypto.com to make Paris their base in Europe, France can point to three interrelated trends working in tandem to solidify the country's position as a leading hub of Web3 development. In short, collaborative regulators, a massive talent pool and healthy capital flows are underpinning the country's Web3 industry, and spearheading growth on a global stage.

A progressive regulatory landscape

Even before the introduction of MiCA, France’s attitude toward crypto regulation has been broadly supportive, inclusive and encouraging over the last several years. While other countries have tightened rules around digital assets (with some even banning crypto), President Macron has embraced the sector.

As part of his so-called 2030 plan, France has committed €30 billion to create the next “high-tech champions of the future.” Web3 accordingly is “an opportunity not to be missed,” and should be part of France's attempt to be a "leader of the future generations of the web.” Among the most beneficial policies Macron has passed have been tax cuts on crypto profits and a simplified registration processes with financial watchdogs.

This softer stance was seen during the build up to the EU’s vote on MiCA, when France started softening their approach to crypto licensing to give operators more time to cooperate with any new Europe-wide standards. The resultant flexible two-tier regime for registration leaves the decision to be fully licensed at the discretion of the registered company.

It's worth noting, these advances also came at a time when the U.K. announced plans to regulate crypto, marking a notable conscious push to distance itself from Europe and the pervading hostilities in the U.S.

When MiCA was passed, it was immediately welcomed by the Autorité des Marchés Financiers (AMF), France's top financial overseer, who cited increased competitiveness and investor protection as obvious benefits to introducing sane crypto policies. The AMF soon after began to consider a fast track system that would get registered firms approved under the new rules.

See also: SocGen Becomes First Company to Secure French Crypto License

In an industry like crypto, where everything is constantly progressing, major players will seek to set up shop in a place with firm foundations. France’s readiness to welcome, introduce and adapt to ever-evolving regulatory frameworks presents them as an attractive option and is already being noted by industry players.

A vibrant Web3 community

Another factor that could see France lead the charge in Europe’s Web3 advances is the fact that it has a notably dynamic community with an increasingly rich pool of talent.

From Paris Blockchain week to NFT Paris and the recently concluded EthCC, France is home to many community-wide and industry-leading events that set the direction for the wider sector. This inevitably fosters ideas, relationships and activities within local Web3 communities.

France has also emerged as one of the top countries attracting blockchain talent, ranking sixth in the world for most blockchain developers per country. The country has benefitted not only from its existing pool of top engineering and tech talent, but also from the flow of talent migrating to crypto-friendly jurisdictions.

Favorable funding environment

Another key component of France’s growing dominance in Web3, is the favorable funding environment. Crypto in France benefits from France's wider tech scene – the country counted 32 unicorns (private companies with at least $1 billion valuations) as of March 2023.

At a time when U.S. VCs are pulling back from crypto, France is seeing a rekindling of sentiment – at least seen anecdotally at events. By the numbers, the pacing of venture funding in France slowed in Q1 2023 but bigger deals were being made overall.

For crypto specifically, at least €1.3 billion has been raised for blockchain projects since 2017 – with little sign of slowing. Last year, Cathay Innovation and crypto wallet startup Ledger partnered up to launch an early-stage fund dedicated to Web3 with a target size of €100 million – the country’s first-ever fund dedicated to the sector. More recently, France's Ministry of Culture pledged €150 million to promote "French cultural sovereignty" in virtual environments.

All of these investments speak volumes of the tenacity of France’s capital markets – even amidst a crypto winter, it has remained resilient and abundant.

Going forward

As different regions around the world try to establish themselves on the tech and crypto playing fields, each will need to vye for attention. France, being a culture center of the world, does not want in that department. While many were attracted to Portugal for its lax tax policies, France offers other ineffables that will always attract a certain type of young and hungry developer. But for the industry to truly blossom, the government and Web3 communities will inevitably have to work in tandem.

See also: Crypto Hubs 2023: Where to Live Freely and Work Smart

Going forward, we can expect to see the continual dynamism and adaptability that will embolden France as an irreplaceable pillar of a booming European crypto ecosystem.