France Proposes New Liability Rules for Crypto Exchanges in DeFi Access
Written with artificial intelligence.
French authorities have proposed changes to the EU's Markets in Crypto-Assets Regulation (MiCA), aiming to hold crypto exchanges liable for customer losses linked to decentralized finance (DeFi) protocols. The proposal includes requirements for exchanges to vet DeFi protocols and monitor for risks.
Overview of the Proposal
French authorities are advocating for stricter regulations on cryptocurrency platforms, particularly concerning their interactions with decentralized finance (DeFi) protocols. Under the proposed revisions to the EU's Markets in Crypto-Assets Regulation (MiCA), crypto exchanges could be held liable for certain losses incurred by customers if they fail to adequately vet protocols.
Key Requirements for Exchanges
The proposal, which stems from a joint response by France’s Treasury, the Financial Markets Authority (AMF), the central bank, and the Prudential Supervision and Resolution Authority (ACPR), suggests that crypto-asset service providers (CASPs) should ensure proper checks on DeFi protocols. Key aspects include:
- Vetting Protocols: Exchanges must conduct due diligence on DeFi protocols before offering access.
- Monitoring Risks: They should continuously monitor these protocols for vulnerabilities and suspicious activities.
- Certification: The proposal supports certification for protocols and smart contracts, enhancing investor protections.
Adjustments for Different Providers
Significant CASPs would face full obligations under the proposed rules, while smaller providers would have scaled responsibilities. Although platforms could connect users to uncertified protocols, they must conduct their own risk assessments and provide explicit risk disclosures.
Broader Regulatory Changes
In addition to DeFi regulations, the proposal suggests transferring oversight of significant CASPs from national regulators to the European Securities and Markets Authority (ESMA). France also seeks to revise the threshold for identifying significant CASPs from 15 million average daily active users in the EU, considering other factors like custody assets and business complexity.
Lastly, the authorities are calling for a review of MiCA’s asset-referenced token (ART) category, with a focus on adapting the e-money token (EMT) framework for multicurrency stablecoins, as no ARTs have yet been authorized under MiCA.