The French National Assembly achieved a significant milestone when it passed the Sorare law, marking the inception of a dedicated regulatory framework for video games utilizing NFTs and cryptocurrency-based monetization models. This monumental decision was part of the larger Digital Space Regulation Law (SREN), which involved the participation of 561 assembly members.
Notably, 437 members cast their votes in favor of adopting this groundbreaking legislation, while 77 members opposed it. This “Jonum regime,” which stands for games involving monetizable digital assets, aims to harmonize the need for innovation within French startup ecosystems with the imperative to protect users.
One of the most remarkable aspects of this legislation is its formal definition of Jonum in legal terms. This is a critical step toward potentially establishing a new regulatory framework that is uniquely tailored to crypto games. Such a framework would differentiate these games from both traditional video games and gambling, providing much-needed clarity and regulation in this rapidly evolving sector.
Karima Lachgar, CEO and Head of Group Legal and Regulatory Strategy at Olky Wallet, highlighted the importance of SREN in legitimizing a sector that has been experiencing rapid growth but has also faced issues related to scams in recent years. While the legislation is a significant leap forward, it’s not yet set in stone. The text will undergo scrutiny by the Constitutional Council, which holds the authority to review and potentially reject it. Several deputies are still hoping for revisions.
Critics of the law have argued that it seems to favor crypto games over online casinos. This has sparked concerns that gambling platforms may attempt to venture into the play-to-earn and Web3 sector, much like Pari Mutuel Urbain (PMU), the state-controlled betting system, did when it entered the crypto space through its fantasy horse racing game, Stables.
The potential adoption of the Jonum regime would undoubtedly be a positive development for the local crypto gaming industry. Earlier regulatory perspectives had put assets used in crypto games in a precarious position, as they appeared to meet three out of the four criteria for defining a game of chance and gambling: public offering, financial stake, and the presence of a mechanism involving chance. Consequently, popular crypto games such as Sorare were at risk of being classified as a form of gambling, which carries significantly heavier tax burdens.
Under the proposed law, the Autorité Nationale des Jeux (ANJ), the French National Gambling authority, would be responsible for ensuring compliance. This would necessitate users reporting their age when creating an account for a crypto game and verifying a player’s identity when withdrawing in-game earnings. Importantly, no identity verification would be required at the registration stage.
In addition, the Jonum regime also introduces measures impacting the promotion of Web3 games using influencers. It specifically prohibits the use of influencers for promotional activities on online platforms that cannot exclude minors, marking a significant step towards ensuring the safety of younger players. This move by the French National Assembly is a testament to the evolving nature of the crypto and NFT sector, and its attempt to strike a balance between innovation and security. The upcoming review by the Constitutional Council will be a critical moment for the French crypto gaming industry, potentially heralding an era of well-defined regulation in this unique space.