French authorities want crypto exchanges to conduct checks on DeFi protocols and face liability for certain customer losses under proposed changes to EU crypto rules.
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.
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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