Are NFT and cryptocurrency-based games considered “gambling?” France doesn’t think so. On Oct. 17, France greenlit a groundbreaking law that could change the country’s entire digital infrastructure.
With approval in the National Assembly, the recently passed legislation, known as the Sorare Law, is designed to establish a regulatory framework for those games that contain crypto and NFT-based elements with the goal of distinguishing them from France’s “gambling” laws due to the volatile nature of these digital assets.
The “Digital Space Regulation Law” (SREN) creates a clear distinction between crypto gaming and gambling. In France, these types of NFT and blockchain-based games are known as “Jonum” or “games with monetizable digital objects.”
Crypto Winnings Cannot Be Exchanged For Fiat
The Sorare law also states that the Constitutional Council is granting a three-year authorization on an experimental basis, so long as the winnings from those games are exclusively digital objects. In other words, the crypto-based winnings are not allowed to be exchanged for fiat.
This was written purposely to distinguish Jonum from those games that are currently regulated by France’s gaming regulator, the ANJ (National Gaming Authority).
The law also requires the French government to submit progress reports within the first 18 months of the experiment to better assess the state of the market and the mechanisms that would be in place to protect players, in addition to preventing money laundering and financing terrorism.
No Influencer Promotions, No Minors
We’ve all seen what happens when celebrities or today’s influencers start promoting NFT projects or crypto-based initiatives in the United States pursuant to the anti-touting provisions of the Securities Act.
As it concerns France, Sorare reflects the ANJ’s views on how influencers and minors come into play – they don’t, and they aren’t messing around. Failure to abide by these laws will automatically subject the influencer to prosecution, facing up to two years in jail and fines of up to $322,000 USD.
The National Assembly defines “influencers” as “individuals or legal entities who, through payment, mobilize their notoriety before their audience to communicate to the public content electronically with the aim of promoting, directly or indirectly, goods, services, or a cause.”
In June, the French Parliament introduced and approved a new law that sets forth requirements for influencers and the parameters in which they are allowed to be involved.
With approximately 150,000 influencers in French territory, the country has forced them to report on whether their content is “advertising” or a “commercial collaboration,” helping the French Parliament understand what type of content consumers are engaging with.
As part of the experiment and assessment, these NFT and blockchain-based games require an identity check, prohibiting anyone under 18 from playing the games, as well as prohibiting influencers from promoting these games if those communications take place on a social media platform, such as TikTok, YouTube, Instagram, etc. and do not have a mechanism that would prevent minors from playing.
This also applies to influencers who live outside of France, but the government hasn’t yet introduced a mechanism that would actually enforce this.
At the same time as the French Parliament introduced its law, the ANJ also issued its own guidelines designed to curtail and prevent gambling addiction, push illegal gambling operators out of the country, and, of course, protect minors. The biggest takeaway is that sports athletes are prohibited from promoting gambling operators in a larger effort to isolate sports from gambling.
With the National Assembly having approved Sorare, the question still remains as to whether these types of games should be defined as “gambling,” as the law still needs approval from France’s highest authority, the Constitutional Council.
If ratified by the Constitutional Council, this law will revolutionize France’s digital landscape. Not only will it legitimize NFT and crypto games, but it will also carve out a distinct category separate from traditional “gambling” games. Such a move could serve as a potential blueprint for the U.S.