Bitcoin, ether… Is your wealth management advisor out of the box?

According to the 2024 edition of the Adan and KPMG study on the profile of investors in cryptoassets, nearly one in ten French people say they hold cryptocurrency, such as bitcoin or ether, or NFTs. , these tokens which allow a unique property right to be associated with a digital object. Faced with growing interest, particularly among young investors, some wealth management advisors (CGP) are adapting to meet this new demand.

“Of the approximately 2,700 partner wealth management advisors, we have around fifteen CGPs active in cryptocurrency who recommend it to their clients. We also have around fifty others who are more wait-and-see. If a client is interested, they don’t kick in, but they wait for it to come from them,” explains Laurent Ovion, director of innovation at DLPK, a group known for its Nortia marketplace of investment supports for professionals. .

For crypto investment, Nortia relies on Alphacap and Coinhouse. They both have digital asset service provider (PSAN) registration from the Financial Markets Authority (AMF). This allows them in particular to buy and sell cryptocurrency on behalf of French investors. At its level, Coinhouse boasts more than 150 partner wealth managers.

Doubts about PSAN monitoring

Registration as a PSAN is mandatory to be able to provide a crypto service in France under article L54-10-3 of the Monetary and Financial Code. Despite its implementation in 2019, some CGPs decide to use unregistered intermediaries to buy or sell cryptoassets.

“I use French but also foreign service providers. In my opinion, the PSAN regulations are insufficient in terms of security,” reports an asset manager. “The PSANs which have obtained registration have certainly been subject to checks on their customer knowledge process and the fight against money laundering. But some remain very light on the subject. I respect my role as a financial investment advisor. I always audit my partners,” he continues.

However, in the event of observed breaches of PSAN obligations in terms of combating money laundering, the financing of terrorism (AML-FT) and freezing of assets, French regulators can act. On its own initiative or that of the Prudential Control and Resolution Authority (ACPR), the AMF can indeed cancel a registered PSAN. Likewise, when the solvency or liquidity of a service provider is compromised or likely to be compromised, the market policeman can issue a red card.

This has already happened. In September 2022, the AMF withdrew its registration from the Bykep platform for serious failings, notably concerning operations carried out without the consent of its clients and serious failures in its AML-FT system. Even more recently, the market watchdog alerted French customers to the risk of administrative closure of a platform that does not have the authorization required to offer its services.

Strengthening obligations and controls

In addition, the AMF may carry out controls and investigations in order in particular to verify that cryptocurrency intermediaries always have a resilient and secure IT system, a system for managing conflicts of interest, which they separate their own assets from those of their clients or that they refrain from using digital assets or cryptographic keys without the express consent of clients.

Downside: these prerogatives permitted by article L621-9 of the Monetary and Financial Code only concern approved PSANs, therefore not simply registered, or having so-called “reinforced” registration. That is to say having submitted a complete registration file after July 2023. In other words: “such a provision is not applicable to so-called ‘simple’ registered PSANs, i.e. all PSANs registered to date”, underlines a fine connoisseur of the regulations. Furthermore, to the extent that no PSAN aimed at a public of individual investors has approval, this also limits the effectiveness of this provision.

However, the end of the PSAN status (registered or approved), by June 30, 2026, for the benefit of the European approval of cryptoasset service providers (PSCA), with requirements similar to the optional approval of the French regime , should make it possible to increase the requirements and the scrutiny of regulators on crypto intermediaries, as well as on CGPs which advise on cryptocurrencies.

Warning from the profession

While waiting for this development, if certain CGPs are critical of the current regulations, do they still have the right to offer their clients a non-PSAN player? “It’s better that they don’t do it,” replies David Charlet, president of the National Association of Financial Advisers (Anacofi).

“This is not strictly prohibited, because investment advisors (CIF) are currently assimilated to PSANs in the advisory part. They can advise on cryptocurrencies. But it is dangerous for the investor. At the slightest problem, their customers and their supervisory bodies could blame them, especially when there are platforms with PSAN status,” explains David Charlet. The CGPs concerned generally highlight the pricing interest of going through a foreign actor.

On the other hand, canvassing – that is to say making unsolicited contact by a natural or legal person – is only authorized for approved PSANs. This is why, when a wealth management advisor is mandated by a PSAN other than an approved PSAN, this must not involve canvassing for the benefit of this platform. If it exceeds this rule, the CGP incurs heavy financial penalties as well as the impossibility of carrying out its activity.

“As soon as there is a white list, offering your clients a platform that is not on it, as was the case with FTX (the manager of this platform, not PSAN, was convicted of embezzlement of funds from clients, Editor’s note), exposes the advisor to problems. The AMF will, among other things, verify that the advice was real and that the CGP was not too well paid by its principal,” insists the president of Anacofi. Furthermore, “assuming that the CGP is in trouble, I would be very surprised if its professional liability insurance covers it if it uses unauthorized platforms. So if the customer has a problem, he risks not being covered,” adds David Charlet.

Therefore, it is prudent to question the CGP on the nature of the recommended platforms to find out if they appear in the AMF white list and, if this is not the case, to question the reasons and the possible risks for the client in order to invest with full knowledge of the facts. The PSCA status should participate in this sorting. From 2025, advisors will also have to request this approval to continue providing cryptocurrency advice.

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