French financial authorities have unveiled an ambitious regulatory proposal that seeks to hold cryptocurrency exchanges legally liable for user losses in decentralized protocols. The initiative aims to strengthen retail investor protections in the context of the upcoming review of the European Union's MiCA regulations.
The joint stance of the French supervisors marks a turning point in the treatment of regulated intermediaries that integrate external services, redefining due diligence obligations in the continent's decentralized ecosystem.
France raises direct responsibilities in access to DeFi
Within the framework of the public consultation launched by the European Commission, several French regulatory bodies, including the Treasury, the Financial Markets Authority (AMF), the Bank of France, and the Prudential Supervision and Resolution Authority (ACPR), have published a strategic document. The French authorities formally maintain that Cryptoasset service providers should be legally liable for certain incidents affecting their customers when they have actively facilitated access to decentralized finance (DeFi) tools.
Originally, the MiCA Regulation excluded fully decentralized activities executed without human or corporate intermediation. However, French regulators argue that when a regulated entity builds direct gateways, user interfaces, or modules within its platform to connect with external smart contracts, it assumes an intermediary role that cannot be separated from end-user security. The findings of this consultation will form the basis of a technical report that the European Commission will submit to EU legislators by June 30, 2027.
New due diligence and audit duties for smart contracts
The French proposal requires service providers to rigorously examine any DeFi protocol before integrating it into their commercial interfaces. This pre-screening would involve verifying code robustness, tracking known vulnerabilities, and establishing continuous monitoring to detect anomalous or suspicious on-chain behavior. The framework would also support formal technical certification schemes for third-party smart contracts.
Despite the general requirement, the authorities are proposing a proportional approach. The most stringent obligations would apply fully to significant providers, while smaller operators would have requirements tailored to their operational capacity. In cases where a protocol lacks independent certification, exchanges could still offer technical connectivity, provided they conduct a thorough internal audit and clearly communicate the associated risks to users who choose to use it. learn about decentralized finance.
Self-custody wallets and direct supervision of ESMA
The regulatory document also addresses the development of software for non-custodial or self-custodial wallets. French regulators have expressed their opposition to imposing widespread mandatory certifications on open-source software developers. Instead, they suggest a purely voluntary certification model focused on advanced wallets that natively incorporate complex aggregation tools or decentralized finance (DeF) connectivity, thereby protecting core DeF technical development.
At the institutional level, France advocates for a substantial transfer of powers from national authorities to the European Securities and Markets Authority (ESMA). With the aim of centrally supervising the most influential operators, regulators propose lowering the current MiCA threshold of 15 million daily active users in the European Union. According to the French proposal, classification as a relevant provider should consider additional metrics such as the volume of assets under custody, the corporate complexity of the group, and the overall risk exposure levels of the infrastructure.
Review of frameworks for asset-referenced data sheets
Another key aspect of the French contribution concerns stablecoin categories within the EU regulatory framework. Supervisors noted that, to date, no entity has received formal authorization as an issuer of asset-linked tokens (ARTs) under the strict terms of MiCA. This situation reflects the inherent complexity of developing products linked to diversified baskets of reserves under the current regulatory wording.
Given this reality, French authorities recommend adapting the framework for electronic money tokens (EMTs) to explicitly and transparently accommodate multi-currency stablecoins. This aims to provide legal certainty to the European market while also ensuring that investors who choose to build your cryptocurrency portfolio They have instruments backed by clear, solid and verifiable regulations within the Union's territory.
FAQ
What exactly does France propose regarding exchanges and DeFi?
France proposes that regulated exchanges assume legal responsibility for losses suffered by their clients due to failures or incidents in external DeFi protocols, provided that the platform has actively facilitated access to or integrated the tool without adequate prior verification.
Will this proposal affect unregulated self-custody portfolios?
Not as a requirement. French authorities rule out requiring systematic certifications for developers of basic self-custody software, recommending only a voluntary seal for complex portfolios that directly integrate decentralized financial services.
What role would ESMA play according to the position of the French regulators?
French regulators are requesting that ESMA assume direct supervision of major crypto-asset providers in the European Union, reducing the 15 million daily user limit to include criteria such as assets held in custody and business volume.
When would these regulatory changes come into effect in the European Union?
The European Commission is compiling these contributions for a technical report scheduled for June 30, 2027. Any formal amendments to the legal texts will require ordinary legislative procedures between the Commission, the European Parliament and the Council.
The French initiative marks a crucial phase in the development of the European regulatory framework, requiring centralized intermediaries to strengthen their technological safeguards before acting as bridges to decentralized ecosystems. As Brussels compiles these considerations for its 2027 assessment, the EU's crypto sector is moving towards more stringent operational standards in terms of transparency and consumer protection.
Investing in cryptoassets is not fully regulated, may not be suitable for retail investors due to high volatility and there is a risk of losing all invested amounts.
Generative artificial intelligence tools were used to create this article.
