French Central Bank's ACPR Consultation Reveals Preferences for DeFi Regulation
Summary:
The French Central Bank’s regulatory body, ACPR, has shared insights from a two-month public consultation on decentralized finance (DeFi) regulations. It was noted that "unintermediated finance" might be a more suitable term in this context, given the visible persistence of centralization patterns. The majority of respondents advocated for DeFi to continue on public blockchains but with regular audits. The ACPR concluded that it is essential to establish certification rules for smart contracts, protective measures for DeFi clients, and supportive strategies for DeFi's blockchain infrastructures. This comes after the European Securities and Markets Authority also expressed views on DeFi, acknowledging its benefits and associated risks.
The French Central Bank’s Autorité de Contrôle Prudentiel et de Résolution (ACPR) shared an overview of its public consultation on formulating regulations on decentralized finance (DeFi) on October 12. Public engagement on this matter occurred over a two-month span from April to May 2023, following the presentation of a seminal paper discussing potential DeFi regulations in France. Notably, the ACPR reportedly received numerous external contributions leading to unexpected discoveries, namely the enduring presence of a centralization pattern. In light of this, the ACPR posited that the terminology "unintermediated finance" better suits the context than "decentralized finance". Furthermore, they raised concerns about operational risks related to the peculiar centralization concentration in DeFi, where cloud service providers wield noteworthy power in managing blockchain nodes. In context: The groundwork for a novel global monetary system is being laid by CBDC, says French Central Bank. As per the summary, the majority of the consultation respondents favored the continuation of DeFi on public blockchains over private or permissioned ones. Still, they acknowledged the need for regular audits of these public blockchains. Proposals for enforcing regulations on go-betweens and for the certification of smart contracts saw wide approval. Wrapping up, ACPR deem it prudent to establish rules for smart contract certification, delineate governance structures safeguarding DeFi users, and propose supportive measures for DeFi's blockchain infrastructures. Preceding this, on October 11, The European Securities and Markets Authority (ESMA) also shared its perspective on DeFi with a comprehensive 22-page report, where it recognized the promising aspects along with the associated sizeable risks. Associated article: Zero-knowledge proofs, beyond cryptocurrencies, demonstrate potential ranging from voting to finance.
Published At
10/13/2023 7:56:01 AM
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