The Autorité des Marchés Financiers (AMF) has mentioned that the method of “identical actions, identical dangers, identical regulation” ought to apply “unambiguously” when regulating DeFi.
The French markets regulator laid out its opinion on regulating decentralized finance (DeFi) in a dialogue paper printed on June 19.
Nonetheless, the watchdog highlighted that DeFi poses extra dangers than the standard monetary sector. Regulators, due to this fact, want to deal with dangers corresponding to cash laundering and terrorist financing along with implementing know-your-customer (KYC) procedures, as using pseudonyms is widespread in DeFi transactions.
Furthermore, since DeFi actions usually transcend borders, the AMF referred to as for international cooperation in regulating the market. The dialogue paper, which articulates the regulator’s “preliminary considering” on DeFi regulation, famous:
“As a result of cross‐border nature and attain of DeFi actions, the AMF additionally helps the event of a worldwide coordinated method in the direction of regulation to make sure a worldwide degree‐taking part in discipline, which ought to each purpose to guard buyers and foster innovation.”
Earlier this yr, the Monetary Stability Board mentioned it’s already working with international customary setters to find out the trail to control DeFi. Moreover, two working teams for the worldwide securities regulator IOSCO are scheduled to publish the suggestions on DeFi regulation by the top of 2023.
The AMF mentioned it helps all these initiatives that can allow the emergence of a “balanced regulatory framework.”
Balancing innovation with buyer safety
The AMF, which points licenses to crypto corporations within the nation, famous that there’s a want for a “clear framework with safeguards” for DeFi protocols. Current market debacles just like the Terra-Luna crash have solely emphasised the dearth of readability within the area, the regulator famous.
Based on the AMF, DeFi “laws ought to be thought in a progressive and proportionate method.” In different phrases, laws ought to weigh the potential advantages of DeFi with the dangers they pose to customers.
The regulator added that the approaching years might be essential and doubly difficult for the DeFi sector. On the one hand, the sector has to discover a clear and safe technique of development that encourages innovation. Then again, the area has to supply “enough ranges of investor safety,” the AMF famous.
The put up French regulator requires international coordination on “identical threat, identical regulation” coverage for DeFi appeared first on CryptoSlate.
