- France proposes holding crypto exchanges liable for certain DeFi-related customer losses if they fail to assess risks.
- French regulators want platforms to vet DeFi protocols and monitor smart contracts for security vulnerabilities.
- MiCA obligations could be stricter for significant crypto-asset service providers, with scaled requirements for smaller platforms.
French authorities have proposed rules that could hold cryptocurrency exchanges responsible for certain decentralized finance (DeFi) incidents when those cryptocurrency exchanges actively help customers reach DeFi protocols without checking the risks properly.
This set of proposals was released on Wednesday as part of a reply to the European Commission’s call for opinions on changing the European Union’s Markets in Crypto-Assets Regulation (MiCA).
The reply was put together by France’s Treasury, the Financial Markets Authority (AMF), the central bank, and the Prudential Supervision and Resolution Authority (ACPR). According to the authorities, crypto-asset service providers (CASPs) should be liable for incidents that affect clients when those crypto-asset service providers actively provide access.
Source: x.com
MiCA today does not cover crypto services that are run entirely without any middlemen. France’s proposal aims to broaden investor protection to platforms that link users with DeFi protocols.
France Wants Exchanges To Screen DeFi Protocols
Under the plan, cryptocurrency platforms would have to check DeFi protocols before letting people use them. They would also have to look for problems in the protocols and watch for anything that seems wrong. French officials also liked the idea of checking DeFi protocols and smart contracts to make sure they are safe.
The rules would be harder for crypto-asset service providers. These are called CASPs. Smaller platforms would have rules that fit their size.
Trading platforms could still let people use protocols that are not checked. They would need to do their own checking. They would also have to tell customers more about the risks involved.
France did not agree with making all non-custodial wallet developers get certified. Instead, France thought that advanced wallets that work with DeFi services should be able to get certified if they want to. This would be a choice, not a rule.
France Pushes For Broader MiCA Changes
Beyond DeFi, French authorities proposed transferring supervision of significant CASPs from national regulators to the European Securities and Markets Authority (ESMA). They also recommended lowering MiCA’s threshold of 15 million average daily active users for identifying significant platforms.
The authorities further called for changes to the asset-referenced token (ART) framework and suggested expanding the e-money token (EMT) rules to cover multicurrency stablecoins.
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