France Calls for Global Consensus on DeFi Regulation
The Autorité des Marchés Financiers (AMF), the prominent French markets watchdog, has expressed its backing for the establishment of international regulatory norms governing decentralized finance (DeFi).
In a cogitative document released on Monday, the AMF – a key body that grants licenses to cryptocurrency exchanges desirous of operating within French borders – divulged its "nascent reflections on the regulatory conundrums" triggered by the decentralized nature and the elimination of intermediaries intrinsic to the DeFi sector.
In the document, the AMF ventures into sketching out DeFi, decentralized autonomous organizations (DAOs) - which are essentially decentralized governance mechanisms, and smart contracts that autonomously orchestrate transactions. It also invites debate on the risks entwined with these innovations and the magnitude of control warranted.
The AMF accentuates the borderless characteristics and global footprint of DeFi activities, advocating for an internationally harmonized regulatory approach. The document posits that such a globally synchronized regulation is imperative for maintaining an equitable competitive landscape and should seek to strike a balance between safeguarding investors and nurturing innovation.
In May, during a conversation with journalists, the AMF Secretary-General, Benoit de Juvigny, hinted at the document as an input to the formulation of the European Union's policy on DeFi. He acknowledged the intricacy in defining and categorizing the players within DeFi, which diverges from the more traditional and centralized counterparts in the financial sector.
In tandem, international regulatory institutions such as the Financial Stability Board (FSB) are navigating the DeFi waters to lay down regulatory standards. A task force convened under the International Organization of Securities Commissions (IOSCO) is anticipated to unveil its set of recommendations by the close of the year.
The AMF document emphasizes the regulator's wholehearted endorsement of these international efforts. The AMF aspires to intensify its dialogue with both public and private stakeholders, fostering an ecosystem conducive for a well-calibrated regulatory framework that underpins the sustainable and judicious progression of decentralized finance in the long haul.
The regulator is cognizant of the fact that while the legislative landscape is increasingly adapting to regulate centralized crypto exchanges, DeFi protocols present a unique supervisory challenge owing to the absence of a clear entity to pin compliance responsibilities on.
As part of its initiative, the AMF has issued an open invitation to industry participants to put forth their inputs and reflections on the discussion points laid out in its document. The window for contributing inputs is open until September 30.
In the document, the AMF ventures into sketching out DeFi, decentralized autonomous organizations (DAOs) - which are essentially decentralized governance mechanisms, and smart contracts that autonomously orchestrate transactions. It also invites debate on the risks entwined with these innovations and the magnitude of control warranted.
The AMF accentuates the borderless characteristics and global footprint of DeFi activities, advocating for an internationally harmonized regulatory approach. The document posits that such a globally synchronized regulation is imperative for maintaining an equitable competitive landscape and should seek to strike a balance between safeguarding investors and nurturing innovation.
In May, during a conversation with journalists, the AMF Secretary-General, Benoit de Juvigny, hinted at the document as an input to the formulation of the European Union's policy on DeFi. He acknowledged the intricacy in defining and categorizing the players within DeFi, which diverges from the more traditional and centralized counterparts in the financial sector.
In tandem, international regulatory institutions such as the Financial Stability Board (FSB) are navigating the DeFi waters to lay down regulatory standards. A task force convened under the International Organization of Securities Commissions (IOSCO) is anticipated to unveil its set of recommendations by the close of the year.
The AMF document emphasizes the regulator's wholehearted endorsement of these international efforts. The AMF aspires to intensify its dialogue with both public and private stakeholders, fostering an ecosystem conducive for a well-calibrated regulatory framework that underpins the sustainable and judicious progression of decentralized finance in the long haul.
The regulator is cognizant of the fact that while the legislative landscape is increasingly adapting to regulate centralized crypto exchanges, DeFi protocols present a unique supervisory challenge owing to the absence of a clear entity to pin compliance responsibilities on.
As part of its initiative, the AMF has issued an open invitation to industry participants to put forth their inputs and reflections on the discussion points laid out in its document. The window for contributing inputs is open until September 30.
