France Threatens to Break EU Crypto Market as AMF Warns of “Atomic Weapon” Against MiCA

France's financial watchdog just dropped a regulatory bombshell—and the entire EU crypto market is bracing for impact.

The AMF isn't playing nice with MiCA. They're threatening what insiders call an 'atomic option'—a move that could fragment Europe's carefully constructed crypto framework right down the middle.

Paris versus Brussels: Who blinks first?

French regulators claim MiCA's one-size-fits-all approach stifles innovation and puts EU nations at a competitive disadvantage. Their solution? A nuclear-level override that would let France set its own rules—defying the bloc's unified regulatory front.

Market players are sweating. If France goes rogue, other nations might follow. Germany's already side-eyeing the rulebook. Italy never liked taking orders anyway.

Another day, another regulatory tantrum—because nothing says 'financial innovation' like a good old-fashioned jurisdictional meltdown.

246 days since MiCA went live and our map shows where crypto launches are taking… pic.twitter.com/1D7y8Wf30P

— STORM Partners (@STORM_Partners) September 2, 2025

However, since the roll out of the scheme, growth has been uneven across regulator jurisdictions, for example Ireland has so far received 17.5x the number of crypto passports as France.

For companies, the passporting mechanism was the prize, an efficient gateway into the bloc’s single market. For regulators like the AMF, however, the past nine months have exposed its fault lines.

European Crypto Companies Are Shopping Around For Weak Jurisdictions

Barbat-Layani warned that companies are already “shopping around” for the weakest jurisdictions, securing lighter-touch licenses before expanding into larger markets such as France. “We do not exclude the possibility of refusing the EU passport,” she told Reuters, likening the option to an “atomic weapon” that could be deployed if supervisory gaps persist.

The comments come as France, Italy, and Austria jointly call for the European Securities and Markets Authority (ESMA) to assume direct oversight of major crypto firms.

In a joint paper, the three regulators argued that early MiCA implementation has revealed “major differences” in how national supervisors interpret and enforce the rules. Direct ESMA supervision, they contend, is essential to safeguard investors and ensure a level playing field.

That push follows stinging criticism of Malta’s licensing regime. In July, an ESMA peer review found that the Malta Financial Services Authority only “partially met expectations” when authorising a crypto provider, highlighting poor risk assessment and slow supervisory follow-up.

Furthermore, the report fuelled concerns that smaller jurisdictions could become regulatory gateways for firms seeking rapid EU access.

Are There Other Reasons Crypto Firms Are Avoiding France?

The high-stakes regulatory debate unfolds against a tense backdrop in France’s own crypto ecosystem. In recent months, a string of violent kidnappings targeting crypto entrepreneurs and their families has rattled the industry. French police have linked at least half a dozen attempted abductions to ransom demands in digital assets, including incidents in which victims were mutilated to pressure relatives into paying millions.

Security experts warn that some of the new EU reporting requirements may inadvertently be making it easier for criminals to identify wealthy targets.

This dual pressure, regulatory fragmentation at the EU level, and mounting domestic security concerns, puts Paris in a difficult position as the summer season approaches.

The AMF has spent years courting blockchain startups, branding France as a jurisdiction with clarity and credibility, particularly after granting Binance’s French entity a license in 2022. But the warning shot over MiCA passports signals a shift from promotion to protection.

The stakes are high for investors and companies. If France unilaterally refuses to recognise licenses from other EU states, the single market promise underpinning MiCA could fracture before it fully takes hold.

But it’s important to understand the risk is not only reputational but structural: a divergence in EU supervision WOULD undermine confidence at a moment when global capital is weighing whether Europe can provide a credible alternative to Trump’s America.