France Adopts New Registration Rules for Crypto Companies in EU's MiCA Framework

France's top markets regulator, the Autorité des Marchés Financiers (AMF), said it supports globally coordinated rules for decentralized finance (DeFi)

In a discussion paper published Monday, the AMF, which issues licenses to crypto exchanges looking to operate in the country, shared its "preliminary thinking on the regulatory issues" raised by the decentralized and "disintermediated" protocols that make up the DeFi ecosystem.

The AMF takes a stab at defining DeFi, the decentralized governance systems known as DAOs and the automated "smart contracts" that run transactions. The paper also raises associated risks and levels of control for debate.

"Due to the cross‐border nature and reach of DeFi activities, the AMF also supports the development of a global coordinated approach towards regulation to ensure a global level‐playing field, which should both aim to protect investors and foster innovation," the paper said.

At a meeting with reporters in May, AMF Secretary General Benoit de Juvigny flagged the paper as a contribution to EU policy development on DeFi, while noting that it will prove “complicated” to categorize participants, unlike those found in conventional finance.

Global standard-setters like the Financial Stability Board (FSB) are also looking to set up standards for the DeFi sector, with a working group for international securities regulator IOSCO set to publish recommendations by the end of the year.

"The AMF fully supports these initiatives, and intends to increase its engagement with stakeholders, both public and private, with a view to allow the emergence of a balanced regulatory framework that will help support the sound development of decentralized finance in the long run," the paper said.

While jurisdictions are increasingly regulating centralized crypto exchanges, DeFi protocols are a challenge to supervise thanks to an apparent lack of an specific entity to target for compliance.

Industry stakeholders are invited to contribute to the AMF's proposed discussion points until Sept. 30.

Read more: What DeFi Must Sacrifice to Appease Regulators

Jack Schickler contributed reporting.