France proposes EU liability rules for crypto platforms offering DeFi access
French regulators have submitted proposals to the European Commission urging updates to MiCA that would require crypto platforms offering decentralized finance access to screen protocols and shoulder liability for certain client losses.
French financial authorities have urged the European Commission to extend European Union crypto rules to decentralized finance by placing screening requirements and legal liability on regulated platforms that route users into DeFi protocols. The joint submission was published by the French Treasury, markets regulator AMF, the Banque de France, and prudential supervisor ACPR in response to a consultation reviewing the Markets in Crypto-Assets Regulation (MiCA).[1][2][3]
Because fully decentralized services currently fall outside MiCA, the French agencies proposed regulating access through crypto-asset service providers (CASPs). Under the proposed framework, platforms actively facilitating DeFi access would face ongoing monitoring requirements and liability for certain client incidents if they fail to conduct proper due diligence, ignore known vulnerabilities, or overlook clear indicators of illicit activity. The pre-access checks would evaluate decentralization, smart contract vulnerabilities, audit histories, governance, liquidity, oracle risks, bridges, and ties to illicit funds.[1]
The authorities also recommended a pre-access pop-up disclosure warning users that a protocol is unregulated, as well as an independent onchain certification scheme for fully decentralized protocols that exceed a significance threshold such as total value locked. Missing a certificate would not trigger an automatic ban if the platform conducts its own review and provides risk disclosures. Furthermore, the authorities argued that protocols not fully decentralized should be regulated as standard service providers under MiCA, called for an explicit ban on EU-authorized platforms offering non-compliant stablecoins, and advocated for a larger supervisory role for ESMA.[1]
Key facts
- The French Treasury, AMF, Banque de France, and ACPR submitted a joint response to the European Commission's consultation on reviewing MiCA.
- The submission proposes holding crypto-asset service providers liable for certain client incidents if they facilitate DeFi access without adequate due diligence or ignore known vulnerabilities.
- Proposed due diligence would require platforms to assess protocol decentralization, smart contracts, audits, governance, liquidity, oracle risks, bridges, and illicit finance ties.
- French authorities proposed an independent onchain certification scheme lasting three years for fully decentralized protocols meeting significance thresholds like TVL.
- Protocols that are not fully decentralized would be classified and treated as service providers under MiCA.
- The authorities recommended barring EU-authorized platforms from servicing non-MiCA-compliant stablecoins and expanding ESMA's supervisory authority over significant CASPs.
- The submission is a regulatory proposal to the European Commission, and any formal changes to MiCA must be enacted by EU lawmakers.
Sources · 3 sources
- UN
UnchainedArticle ·
French Authorities Push EU to Make Crypto Exchanges Screen DeFi Protocols for Users Regulated crypto platforms that actively give customers access to decentralized finance should be liable for certain incidents that hit those clients, particularly if they did not properly assess the protocol first, France’s financial authorities told the European Commission. The proposal sits in a joint response to the European Commission ‘s targeted consultation on reviewing the Markets in Crypto-Assets Regulation (MiCA), which the French Treasury , the markets regulator AMF , the Banque de France and the prudential supervisor ACPR published on Wednesday. It is a submission to the Commission, not legislation, and any change to MiCA would still have to come from EU lawmakers. Rather than forcing a full license on protocols that nobody controls, the French bodies want EU rules to reach DeFi through the regulated firms that stand between users and those protocols, known as crypto-asset service providers (CASPs). Fully decentralized services currently fall outside MiCA altogether. Get Unchained’s crypto news in your inbox with the free Unchained Daily newsletter . Three Pillars The response lays out a framework built on “CASP due diligence and ongoing monitoring; prior certification of protocols and smart contracts; and CASP liability,” with those duties applying in full to significant CASPs. Before opening access, a platform would check whether a protocol is genuinely decentralized and review its smart contract weaknesses, audit record and past incidents, governance, liquidity and oracle risks, bridges, and ties to illicit funds using blockchain analytics. The authorities also recommended a pop-up acknowledgment, shown before access, telling users the protocol is unregulated. On liability , the authorities wrote that “CASPs should be liable for certain incidents affecting clients where they actively facilitated access, particularly if they failed to perform adequate due diligence, ignored known vulnerabilities, or maintained access despite clear indicators of illicit activity or material operational weaknesses.” Who is responsible for assets deposited in a protocol, they added, still “requires further clarification from the Commission and the European Supervisory Authorities.” Certification, Not a Ban The French bodies also backed an independent certification scheme for protocols and smart contracts. Certificates would attach to a code base, last three years and be recorded onchain, and only fully decentralized protocols above a significance threshold, such as total value locked, would need one. A missing certificate would not by itself rule out access, the authorities wrote, as long as the platform does its own review and tells clients more about the risks. Requiring certification from every non-custodial wallet developer, the authorities said, would be disproportionate for now. “A harmonised EU framework based on due diligence, certification, verified liquidity and ongoing monitoring is preferable to a blanket prohibition,” the response said. Protocols that are not fully decentralized should be treated as service providers under MiCA, the authorities argued, writing that “DeFi status must remain the exception, not the rule.” Beyond DeFi, the group asked that EU-authorized providers be explicitly barred from offering services on stablecoins that do not meet MiCA’s requirements, and called for a bigger role for ESMA in supervising significant crypto service providers. Related Listen: Crypto Has Seen Drama Over ENS, BonkDAO and VVV. What Does DeFi’s Future Look Like? The post French Authorities Push EU to Make Crypto Exchanges Screen DeFi Protocols for Users appeared first on Unchained .
Open source - LS
Laura Shin@laurashinPost on X ·
NEW: France's Treasury, AMF, Banque de France and ACPR told the European Commission that MiCA should cover DeFi through regulated platforms: vet protocols, monitor them, back a certification scheme and hold platforms liable for certain client incidents. https://t.co/eqsx3Bwtib
Open source - CT
Coin TelegraphArticle ·
France proposes liability for crypto exchanges offering DeFi access French authorities want crypto exchanges to conduct checks on DeFi protocols and face liability for certain customer losses under proposed changes to EU crypto rules.
Open source