Regulated crypto platforms that actively give customers access to decentralized finance should be liable for certain incidents that hit those clients, particularly if they did not properly assess the protocol first, France’s financial authorities told the European Commission.
The proposal sits in a joint response to the European Commission‘s targeted consultation on reviewing the Markets in Crypto-Assets Regulation (MiCA), which the French Treasury, the markets regulator AMF, the Banque de France and the prudential supervisor ACPR published on Wednesday. It is a submission to the Commission, not legislation, and any change to MiCA would still have to come from EU lawmakers.
Rather than forcing a full license on protocols that nobody controls, the French bodies want EU rules to reach DeFi through the regulated firms that stand between users and those protocols, known as crypto-asset service providers (CASPs). Fully decentralized services currently fall outside MiCA altogether.
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Three Pillars
The response lays out a framework built on “CASP due diligence and ongoing monitoring; prior certification of protocols and smart contracts; and CASP liability,” with those duties applying in full to significant CASPs.
Before opening access, a platform would check whether a protocol is genuinely decentralized and review its smart contract weaknesses, audit record and past incidents, governance, liquidity and oracle risks, bridges, and ties to illicit funds using blockchain analytics. The authorities also recommended a pop-up acknowledgment, shown before access, telling users the protocol is unregulated.
On liability, the authorities wrote that “CASPs should be liable for certain incidents affecting clients where they actively facilitated access, particularly if they failed to perform adequate due diligence, ignored known vulnerabilities, or maintained access despite clear indicators of illicit activity or material operational weaknesses.” Who is responsible for assets deposited in a protocol, they added, still “requires further clarification from the Commission and the European Supervisory Authorities.”
Certification, Not a Ban
The French bodies also backed an independent certification scheme for protocols and smart contracts. Certificates would attach to a code base, last three years and be recorded onchain, and only fully decentralized protocols above a significance threshold, such as total value locked, would need one. A missing certificate would not by itself rule out access, the authorities wrote, as long as the platform does its own review and tells clients more about the risks. Requiring certification from every non-custodial wallet developer, the authorities said, would be disproportionate for now.
“A harmonised EU framework based on due diligence, certification, verified liquidity and ongoing monitoring is preferable to a blanket prohibition,” the response said.
Protocols that are not fully decentralized should be treated as service providers under MiCA, the authorities argued, writing that “DeFi status must remain the exception, not the rule.”
Beyond DeFi, the group asked that EU-authorized providers be explicitly barred from offering services on stablecoins that do not meet MiCA’s requirements, and called for a bigger role for ESMA in supervising significant crypto service providers.
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