The AMF publishes a discussion paper on Decentralised Finance (DeFi)

Key dates

June 19, 2023

- AMF publishes initial discussion paper on DeFi regulatory issues

September 30, 2023 Deadline

- Deadline for stakeholder contributions to the discussion paper

July 10, 2024

- AMF publishes summary of responses to the discussion paper

Suggested considerations

• Submit feedback (past deadline): Stakeholders could contribute by September 30, 2023, to innovation@amf-france.org.
• Monitor developments: Track AMF/ACPR follow-ups, including smart contract certification discussions.
• Conduct internal assessments: Analyze DeFi exposures using IOSCO criteria—identify responsible persons, risks (operational, AML/CTF), interconnections with TradFi, and ensure disclosures/conflict management.
• Enhance compliance programs: Prepare for proportionate rules on governance, cybersecurity, solvency, transparency; align with "same risk, same regulation" for DeFi-like activities.
• Engage stakeholders: Participate in AMF ecosystem dialogues at French/EU/international levels.

What changed

• This is a discussion paper and consultation, not binding legislation, so no immediate regulatory changes or requirements are imposed. Key discussion points include:
• Defining DeFi based on decentralization criteria (e.g., automation, network architecture, governance, lack of single points of failure).
• Distinguishing permissioned vs. permissionless protocols and public vs. private blockchains.
• Regulatory approaches to smart contracts (e.g., certification, varying responsibilities), open-source code, and governance.
• Adopting IOSCO recommendations: identify responsible persons (developers, DAOs), enforce risk management, disclosures, conflict-of-interest mitigation, and applicable laws.
• Proportionate regulation emphasizing "same activity, same risk, same regulation," addressing risks like price manipulation, liquidity issues, pseudonymity-enabled AML/CTF, and KYC gaps. The AMF advocates global coordination for a level playing field.

Who is affected

• DeFi protocol developers, foundations, DAOs, and operators (including those on permissioned/permissionless blockchains).
• Crypto-asset service providers (CASPs), DEXes, AMMs, lending platforms offering bank-like services.
• Firms interfacing with DeFi (e.g., fintechs, crypto exchanges, banks with crypto exposure).
• Investors and participants in DeFi activities, due to heightened focus on protection.
• assets should monitor, especially post-MiCA implementation.

Related regulations

• AMF/ACPR joint paper (2023/2024)
• Goodwin Law analysis (July 2024)
• aligned outcomes like risk frameworks and cross-border cooperation. (https
• technology-fs-defi-regulatory-developments-in-france-amf)1
• CoinGeek commentary
• risk-same-regulation-france-amf-calls-for-tougher-defi-oversight/)2