The UK needs a workable route to regulated DeFi access

French regulators have proposed new rules for cryptocurrency exchanges that would impose liability on platforms offering access to decentralized finance (DeFi) protocols. The changes are part of proposed revisions to the EU's Markets in Crypto-Assets Regulation (MiCA). The joint response from France's Treasury, the Financial Markets Authority, the central bank, and the Prudential Supervision and Resolution Authority addresses concerns raised by the European Commission following a consultation.

DeFi protocols face uncertainty as the EU's crypto rules are developed, prompting the proposal. Authors of the draft want exchanges to verify DeFi protocols before granting access and to keep an eye on potential vulnerabilities and suspicious behavior. The rules apply to major crypto platforms, but smaller providers would have scaled duties.

Platforms can still connect users to unverified protocols if they perform their own risk assessment and disclose risks to customers. The authorities also suggested voluntary certification for advanced self-custodial wallets, which integrate DeFi services, rather than blanket certification for developers. France wants to broaden the definition of significant crypto platforms, considering factors such as asset custody, business risks, and group complexity.

The proposal also calls for a review of MiCA's Asset-Referenced Token (ART) category, which currently only includes stablecoins.