France’s Markets Regulator supports global crypto regulations for DeFi.
The French financial regulator, the Autorité des Marchés Financiers (AMF), has announced its support for clear and globally coordinated regulation of decentralized finance (DeFi) to protect users and encourage growth in the innovative sector. The AMF published a paper on DeFi on Monday, outlining its preliminary ideas on the subject, including a definition of DeFi, observed trends, and an ecosystem overview. The paper delves deeper into areas such as decentralized trading protocols and governance mechanisms and provides discussion points that may be useful in a regulatory context. The AMF aims to encourage discussions with ecosystem stakeholders to develop a balanced regulatory framework that will support the sound development of decentralized finance in the long run. The French financial regulator, Autorité de Contrôle Prudentiel et de Résolution (ACPR), has already submitted proposals for DeFi regulation. The AMF also supports a global coordinated approach to regulation to ensure a level playing field and protect investors while fostering innovation. The European Commission will soon assess DeFi-related developments and evaluate the need to regulate the sector. International entities such as IOSCO49 and the FSB50 will also provide guidance and recommendations for jurisdictions in terms of regulating DeFi. However, the AMF has warned that while DeFi’s novel approach to traditional financial services may provide opportunities for technological innovation, it also leads to risks and challenges. The regulator emphasised the need for an unambiguous framework with safeguards that would allow better information sharing and protect DeFi users to foster trust in the ecosystem. The AMF welcomes opinions on the views expressed in the paper until the end of September.
DeFi is No Stranger to Disruption
The AMF said that blockchain has provided an “innovative and disruptive mechanism” that has challenged the technological infrastructure upon which the digital economy is built. DeFi, building on the use of blockchain, is “no stranger to such disruption,” it added. However, the AMF warned that DeFi’s novel approach may provide opportunities for innovation, but it also leads to risks and challenges. The AMF cited the crash of the Terra/LUNA protocol in May 2022, which highlighted the lack of clarity in operating such protocols and emphasised the need for an unambiguous framework. This framework would need to include safeguards that would allow better information-sharing and protect DeFi users “in order to foster trust in the ecosystem and the innovation it brings.”
The AMF said that the views expressed in the paper are not its official position and that it welcomes respondents’ opinions on them until September 30.
- Etherscan releases AI Code Reader.
- Tel Aviv Stock Exchange allows nonbank customers to trade crypto, 2 hackers arrested in France, $70M in BTC and ETH donated to Ukraine.
- Proposal to increase Ethereum validator limit from 32 Ether to 2,048 Ether.
____
Learn more:
– DeFi Needs to Be Simpler for Wider Adoption, Uniswap Survey Suggests – Looking at DeFi’s Untapped Potential – What DeFi Offers Beyond Lending for Crypto Speculation – Top 7 Decentralized Derivatives Trading Platforms
