France DeFi liability plan would make exchanges vet protocols
France's financial authorities want EU rules that make regulated crypto platforms check DeFi protocols before offering them, and share responsibility when users are hurt.
A France DeFi liability proposal is now on the European Commission's desk. In a joint response to the review of the Markets in Crypto-Assets Regulation published on Wednesday, Oct. 21, the French Treasury, the AMF, the Banque de France and the ACPR said regulated platforms that open DeFi access to clients should vet protocols first and be liable for certain incidents.
What happened
Today, services provided in a fully decentralised way without an intermediary sit outside MiCA. Rather than license protocols that nobody controls, the French bodies want to reach DeFi through the crypto-asset service providers, or CASPs, that stand between users and those protocols, Unchained reported.
The framework rests on "CASP due diligence and ongoing monitoring; prior certification of protocols and smart contracts; and CASP liability." A platform would first have to confirm that a protocol is truly decentralised and examine its code weaknesses, audit record, past incidents, governance, oracle and bridge risks and links to illicit funds. Users would see a warning that the protocol is unregulated.
The proposal also covers other gaps. The authorities want clearer rules for staking and for crypto lending and borrowing, a regime for stablecoins issued both inside and outside the EU, and a review of MiCA's asset-referenced token category after no tokens were authorised under it, according to the AMF and crypto.news.
On liability, the response says CASPs "should be liable for certain incidents affecting clients where they actively facilitated access, particularly if they failed to perform adequate due diligence, ignored known vulnerabilities, or maintained access despite clear indicators of illicit activity." Certificates for protocols would last three years and be recorded onchain, though a missing one would not on its own block access.
Why it matters
The plan stops short of automatic compensation for every exploit, crypto.news noted, and full duties would apply only to significant CASPs, with lighter rules for smaller firms. Non-custodial wallet developers would not face mandatory certification. "A harmonised EU framework based on due diligence, certification, verified liquidity and ongoing monitoring is preferable to a blanket prohibition," the authorities wrote.
France DeFi liability rules would change the economics for exchanges that route users to lending or trading protocols, since each listing would carry legal risk. The same response asks for a bigger role for ESMA over large providers and an explicit ban on EU firms serving stablecoins that do not meet MiCA, issues that also came up in our Circle MiCA review report. Perpetuals platforms have pushed their own views, as in our Hyperliquid Policy Center piece.
Britain is moving on a parallel track. The FCA opened a consultation the same day on DeFi guidance covering operational resilience and financial crime, with comments due by Nov. 18 and final guidance planned for January 2027.
What's next
These are proposals, not law; any change to MiCA needs EU lawmakers. The AMF's summary is here.
Industry pushback has started, with the Cardano Foundation opposing extra DeFi rules in its own submission, crypto.news reported. How the Commission weighs the France DeFi liability idea will show in its draft revision.
This article is for information only and is not investment advice.