France proposes liability for crypto exchanges offering DeFi access

France wants cryptocurrency platforms to face liability for certain decentralized finance (DeFi) incidents if they fail to vet protocols or ignore known security risks.

French authorities published proposals Wednesday to revise the European Union’s Markets in Crypto-Assets Regulation (MiCA). The joint response to a European Commission consultation came from France’s Treasury, the Financial Markets Authority (AMF), the central bank and the Prudential Supervision and Resolution Authority (ACPR).

“CASPs [crypto-asset service providers] should be liable for certain incidents affecting clients where they actively facilitated access,” French authorities said.

MiCA excludes crypto services provided in a fully decentralized manner without intermediaries. France’s proposal would extend investor safeguards by imposing new duties on regulated platforms that connect customers to DeFi protocols.

The Commission is reviewing whether MiCA needs updating as crypto markets develop. Its consultation sought views on activities outside the law’s original scope, including DeFi. The responses will inform a report to EU lawmakers due by June 30, 2027, which could include proposals to amend the law.

DeFi access could come with new obligations

French authorities proposed requiring platforms to vet DeFi protocols before offering access and monitor them for vulnerabilities and suspicious activity. They also backed certification of protocols and smart contracts, along with platform liability for certain incidents.

The requirements would apply fully to significant CASPs, with obligations scaled for smaller providers.

Platforms could still connect customers to uncertified protocols if they conduct their own due diligence and provide enhanced risk disclosures, the authorities said.

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The authorities also addressed non-custodial or self-custodial wallets by opposing blanket certification requirements for developers. They favored voluntary certification for more advanced wallets that integrate DeFi services.

France pushes for wider MiCA overhaul

Beyond DeFi, France backed plans to transfer supervision of “significant CASPs” from national regulators to the European Securities and Markets Authority (ESMA).

The authorities also proposed lowering MiCA’s current threshold of 15 million average daily active users in the EU for identifying significant CASPs. They also suggested considering custody assets, business risks and group complexity when deciding which platforms should fall under ESMA supervision.

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France also called for a review of MiCA’s asset-referenced token (ART) category, which covers tokens designed to maintain a stable value by referencing assets or combinations of assets. The authorities noted that no ARTs had been authorized under MiCA and proposed adapting the e-money token (EMT) framework to cover multicurrency stablecoins.

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