Payment instruments
The past few years have seen the emergence of so-called alternative payment methods, which allow transactions to be carried out in units other than legal tender. These include crypto-assets, which do not constitute payment instruments in the legal sense.
A crypto-asset is a digital asset created using cryptographic technologies. They are so named because they resemble financial assets and are created and used by means of encryption technologies. Crypto-assets are sometimes incorrectly referred to as cryptocurrencies, but they should not be regarded as a currency.
There are several types of crypto-asset. First-generation crypto-assets, such as Bitcoin and Ethereum, are not legal tender and have no intrinsic value. They are therefore speculative and highly risky assets. More recently, "stablecoin" projects (such as DIEM) have been trying to overcome these limitations by aiming to have a more stable value. To achieve this, their price is supposedly linked to that of a benchmark asset (gold, the euro, the dollar, a group of currencies, etc.), which anchors their movement to the real economy and reduces the amount the fluctuate – hence their name. Stablecoins can be regarded as the second generation of crypto-assets.
In the absence of international regulation of crypto-asset services, a number of initiatives have been launched in recent years in various countries. France is at the forefront of jurisdictions that have very quickly provided responses to players in this segment. The PACTE Law (Law No. 2019-486 of 22 May 2019 on the growth and transformation of companies) introduced the status of digital asset service provider (DASP), which covers the following activities: custody of digital assets on behalf of third parties, purchase/sale of digital assets in exchange for legal tender (or other digital assets), operation of a digital asset trading platform, reception and transmission of orders on behalf of third parties, portfolio management on behalf of third parties – as well as other complementary services (consultancy, underwriting, guaranteed and non-guaranteed investment). The custody of digital assets on behalf of third parties and the purchase/sale of digital assets in exchange for legal tender must be registered with the Autorité des marchés financiers (AMF – Financial Markets Authority). DASPs wishing to do so may also apply for an optional licence from this institution.
To provide a European solution to these issues, in 2020 the European Commission published a draft regulation on markets in crypto-assets (MiCA), which introduces a pilot scheme for market infrastructures wishing to trade and settle transactions in financial instruments in the form of crypto-assets.
The term "Big Tech" refers to the companies that dominate the information and communication technology sector. These include the US GAFAM corporations (Google, Apple, Facebook, Amazon and Microsoft), but also the Chinese companies known by the acronym BATX (Baidu, Alibaba, Tencent and Xiaomi).
Although present across a wide range of activities, from e-commerce to electronic equipment, these companies are increasingly investing in financial services. They are capitalising on the data collected in the course of their activities, and taking advantage of their position as an interface to offer payment services to their customers. At present, their main segment of activity in the payment sphere is digital wallets.