Banque de France, the central bank of France, has prepared a list of suggestions and issues regarding DeFi regulation before the MiCA is implemented in Europe.
A group of authors from the Banque de France, the French central bank, have released a paper that looks at the regulation of decentralized finance (DeFi) and the various aspects of the upcoming regulations in Europe concerning Europe. The paper notes that the discussions of such regulations are important due to the rising use of blockchain technology and tokenization in various sectors.
“This discussion paper puts forward a number of regulatory options, some of which are complementary, others alternative. The main idea developed in this paper is that the regulation of disintermediated finance cannot simply replicate the systems that currently govern traditional finance. On the contrary, regulations must take into account the specific features of DeFi,” states the paper in summary.
Prepared by Banque de France’s Fintech-Innovation Hub members, the paper further implies that certification and incorporation were necessary for decentralized autonomous organizations (DAOs) through enhanced security and supervision. The paper states that the European Union’s Markets in Crypto-Assets (MiCA) exclude organizations with completely decentralized services. The regulation would have to redefine some of its provisions to include crypto asset service providers.
The paper also supports minimum standards for blockchain, though it might be difficult to implement in public blockchains. Hence the authors prefer to use resolution mechanisms in DAOs, and a regulatory framework for private blockchains.
The paper also argued for the regulation of stablecoins, which were growing in popularity worldwide. French legislators also passed a bill regarding crypto regulation a month back.