France’s Markets Regulator Backs Global Rules for DeFi
The AMF is seeking input from industry participants regarding its perspective on supervising DeFi, DAOs, and the associated risks. France’s leading markets regulator, the Autorité des Marchés Financiers (AMF), has expressed its endorsement of globally coordinated regulations for decentralized finance (DeFi).
In a recently published discussion paper, the AMF, responsible for granting licenses to cryptocurrency exchanges operating in the country, shared its initial thoughts on the regulatory challenges posed by the decentralized and “disintermediated” protocols that constitute the DeFi ecosystem.
The paper attempts to define DeFi, the decentralized governance systems known as DAOs, and the automated “smart contracts” that facilitate transactions. It also addresses the accompanying risks and the levels of control involved, opening them up for discussion.
The AMF paper acknowledges the cross-border nature and global reach of DeFi activities and advocates for the development of a coordinated regulatory approach to establish a level playing field worldwide. The objective of such an approach would be to safeguard investors and encourage innovation.
During a media briefing in May, AMF Secretary General Benoit de Juvigny highlighted the paper’s significance in shaping EU policies related to DeFi. He also acknowledged the challenges involved in categorizing participants, which differ from those encountered in traditional finance.
Global standard-setting organizations like the Financial Stability Board (FSB) are actively working on establishing standards for the DeFi sector. The International Organization of Securities Commissions (IOSCO) has formed a working group that is expected to publish recommendations by the end of the year.
The AMF expresses full support for these initiatives and intends to increase its engagement with both public and private stakeholders. The aim is to foster the emergence of a balanced regulatory framework that promotes the sustainable growth of decentralized finance in the long term.
While jurisdictions are increasingly regulating centralized cryptocurrency exchanges, supervising DeFi protocols presents a challenge due to the absence of a specific entity to target for compliance.
Industry stakeholders are encouraged to contribute to the AMF’s proposed discussion points until September 30th.
