French financial authorities have proposed making regulated cryptocurrency platforms liable for certain losses arising from decentralized finance protocols they provide access to, potentially extending investor protections beyond the European Union's existing Markets in Crypto-Assets Regulation.
The proposals were published on October 21 and submitted jointly by the French Treasury, Financial Markets Authority, Banque de France and Prudential Supervisory and Resolution Authority as part of the European Commission's review of MiCA. Under the proposed framework, crypto-asset service providers would face new responsibilities for assessing protocol security, monitoring vulnerabilities and protecting customers from identifiable risks.
The recommendations are not binding rules. They will inform the Commission's assessment of whether MiCA should be amended to cover activities currently outside its regulatory perimeter.
France's proposal focuses on regulated intermediaries that actively connect customers to decentralized protocols, rather than imposing uniform licensing requirements on decentralized applications themselves. MiCA currently excludes crypto-asset services provided in a fully decentralized manner without an intermediary. French authorities argue that regulated platforms offering customers access to these services should nevertheless bear responsibilities for how those connections are established and maintained.
Platforms would be expected to conduct due diligence before connecting customers to DeFi protocols and continue monitoring them for security weaknesses and suspicious activity. The proposed framework also supports certification of protocols and smart contracts. Platforms could still offer access to uncertified applications if they conduct independent assessments and provide enhanced risk disclosures.
Requirements would apply fully to significant crypto-asset service providers, with proportionate obligations for smaller providers. France opposed mandatory certification for all self-custodial wallet developers, instead favoring voluntary certification for advanced wallet products integrating DeFi functionality.
France also supports transferring direct supervision of significant crypto-asset service providers from national regulators to the European Securities and Markets Authority. It proposed lowering MiCA's threshold of 15 million daily active users in the EU and considering additional indicators including assets under custody, business risks and corporate group complexity.
The authorities also called for a review of the rules governing asset-referenced tokens, which have yet to receive any authorizations under MiCA, and for adapting e-money token rules to accommodate stablecoins pegged to multiple currencies. The broader review follows the European Commission's consultation launched in May, with a report due to EU lawmakers by June 30, 2027.
