The primary market regulator of France, the Autorité des Marchés Financiers (AMF), has expressed its endorsement for globally coordinated regulations concerning decentralized finance (DeFi).
In a recently published discussion paper, the AMF, responsible for granting licenses to cryptocurrency exchanges operating within the country, has outlined its initial thoughts on the regulatory concerns surrounding the decentralized and “disintermediated” protocols that constitute the DeFi ecosystem.
The paper provides definitions of DeFi, decentralized autonomous organizations (DAOs), and the automated “smart contract” that facilitates transactions. It also highlights associated risks and control levels to fuel further debate.
Given the cross-border nature and widespread influence of DeFi activities, the AMF additionally advocates for the establishment of a globally coordinated regulatory approach. This approach aims to create a level playing field worldwide, safeguarding while fostering innovation, as stated in the paper.
During a meeting with journalists in May, AMF Secretary General Benoit de Juvigny emphasized that the paper contributes to the development of European Union policies regarding DeFi.he acknowledged the complexity of categorizing participants in contrast to those observed in traditional finance.
Global organizations responsible for setting standards, such as the Financial Stability Board (FSB), are also working on formulating regulations for the DeFi sector. The International Organization of Securities Commissions (IOSCO), through a working group, intends to publish recommendations by the year’s end.
The AMF expresses its full support for these initiatives and aims to enhance its collaboration with both public and private stakeholders. The goal is to facilitate the emergence of a balanced regulatory framework that promotes the secure growth of decentralized finance in the long term, according to the paper.
Supervising DeFi protocols poses challenges as they lack a specific entity to target for compliance, unlike centralized crypto exchanges that jurisdictions increasingly regulate. The gather insights, the AMF has invited industry stakeholders to contribute to the proposed discussion points until September 30th.
Also Read: Bank of France Urges Regulation of Crypto Conglomerates
