Incumbent French President Emmanuel Macron looks set to be re-elected for another five year term in two weeks’ time. In the first-round vote last Sunday, Macron came top with 27.6% of the vote and will now face Marine Le Pen on the 23rd April in a re-run of the last presidential election. While polls have narrowed between the two – and a shock Le Pen victory cannot be ruled out – it does seem likely that Macron will retain the presidency for another term.
What would another Macron government mean for French fintech? In his first term, Macron was broadly supportive of the sector. He oversaw significant investment in tech, and recently introduced a 7 billion euro package to support start-ups and the digital economy. Macron has also promoted public sector involvement in the fintech space, seeking to leverage public funds to strengthen the French ecosystem. Perhaps this is one reason for the quick proliferation of unicorns, with Macron reaching his target of having 25 tech unicorns three years early.
Philosophically, Macron is clearly on board with the spirit of fintech, and perhaps decentralised finance as well. He has previously argued that the blockchain could be used on a European level to boost the agricultural sector and address concerns surrounding food traceability. As a junior finance minister in the Hollande administration, he suggested that government bonds could be put onto the blockchain.
This is an idea he has also experimented with as President. As part of a scheme commissioned by the Banque de France, led by securities depository Euroclear and participated in by leading French banks, France has successfully used digital assets and blockchain technology to make bond transactions. By using a CBDC to participate in the French debt market, banks have seen how using the blockchain can lead to safer and quicker settlements.
While all of this looks promising, it is also important to be aware of Macron’s vulnerabilities. Nowhere is this more significant than when it comes to EU issues. Macron is an ardent Europhile and anything that he perceives to be a challenge to the authority of the EU must, in his view, be destroyed.
Just look at how the French government responded to suggestions from the global tech giants that they may get involved with digital assets. Although the idea has now died anyway, France reacted with fury at suggestions that Facebook may issue its “Libra” crypto. French officials were apparently concerned that this would undermine Europe’s “digital sovereignty” and even the European Central Bank’s ability to influence monetary policy. France’s Economy Minister, Bruno Le Maire, penned an astonishing op-ed in the Financial Times rubbishing the project:
As a result, the EU has brought forward plans for restrictive rules against stablecoins in a law that could stifle the progress of DeFi on the continent. This is at the same time as the United Kingdom is seeking to make the country a “global cryptoassets hub.” Could Macron see himself losing out to Britain’s bid to attract crypto business, especially given London is already Europe’s fintech capital?
Macron is on a mission to see Paris overtake London as a financial hub in the aftermath of the UK’s succession from the EU. In the realm of traditional finance, this has had some (but somewhat limited) success, as DisruptionBanking has explored previously. Given Macron is so determined for this to happen – for both political and economic reasons – there is a danger that France will become a home to crypto giants with questionable business practices.
Indeed, the French government led by Macron has courted a close relationship with cryptoexchange Binance, which is extremely controversial in many different jurisdictions around the world. A DisruptionBanking investigation confirmed that the cryptoexchange is looking to establish its European headquarters in the French capital. This is something that the company’s CEO, Changpeng Zhao, has also alluded to. Could Macron open France’s doors to any and all crypto business in a bid to encourage the maximum possible investment? More compliant exchanges, like Coinbase, are set up in other jurisdictions such as Dublin.
Should Macron win the election as is expected, it will be an interesting five years for French fintech. Ideologically, Macron is clearly on board with the philosophical ideas underpinning the fintech and crypto movements. But whether he can and will translate this into sound policies which make France an attractive place to do business – yet in a way which does not undermine the country’s reputation – remains to be seen.
Author: Harry Clynch