Last week, the French National Assembly officially passed the so-called Sorare law, which is set to introduce the first regulatory framework targeting video games aimed at regulating so-called non-fungible tokens (NFTs) and crypto-powered monetization schemes.
The piece of legislation was included as part of the French National Assembly’s agenda on the broader Digital Space Regulation Law (SREN), with the body’s 561 members casting their votes on the draft. The adoption of the proposed bill was backed by 437 members, while 77 Assembly members voted against it.
The wording of the draft bill called the “Jonum regime”, which targets games featuring monetizable digital objects, seeks to balance fostering innovation among French startups and making sure user protection is provided. Reportedly, this piece of legislation defines “Jonum” for the first time, paving the way for a potential new regulatory framework that has been specifically customized to target crypto games and is distinctive enough from gambling and traditional video games.
As explained by the CEO and head of Olky Wallet’s group legal and regulatory strategy, Karima Lachgar, SREN may contribute to making the sector legal. Ms. Lachgar also noted that the industry has been growing fast over the last few years, which has also become the reason why it was affected by some scams.
Constitutional Council Still Has to Approve the Proposed Piece of Legislation
However, the decision of the French National Assembly to pass the Sorare legislation was not enough. The wording of the proposed law is required to first undergo the Constitutional Council’s examination, as this is the body responsible for the review and approval of such pieces of legislation.
According to media reports, the opponents of the bill have pointed out that the legislative measure would treat crypto games with special preference to online casinos.
To prevent that from happening, Ms. Lachgar suggested that the gambling platform may move to enter into the Web3 and play-to-earn sector, such as Pari Mutuel Urbain (PMU) under the provisions of the new law. PMU is the state-controlled betting system that has already set foot in the crypto sector via the addition of Stables, a fantasy horse racing game.
Even though it would take some time to finalize, some market analysts have shared their opinions that the “Jonum regime” would be a positive development for the French crypto-gaming industry.
Previously, French regulatory bodies had noted that the assets used in crypto games meet three of the four criteria in the definition of gambling and game of chance – financial stake, public offering, and the presence of a chance-involving mechanism. As a result, popular crypto games could be categorized as a form of gambling – a market segment that is usually associated with a much heavier tax regime.
Under the text of the proposed piece of legislation, crypto games will be placed under the monitoring of the French National Gambling Authority, also known as the Autorité Nationale des Jeux (ANJ). This means that users will have to report their age when setting up an account for a crypto game and verify their identity whenever they try to withdraw their earnings. However, users will not be required to verify their identity at registration.
Apart from that, the “Jonum regime” includes measures affecting the promotion of Web3 games using social media influencers. Under the provisions of the new law, the operators will not be allowed to use influencers for promotional activities on online platforms because they are unable to effectively exclude underage individuals from the promotions. This part of the draft’s wording suggests that promotional efforts on many social media platforms, including YouTube, may remain intact.