The Bank of France wants more power over DeFi

Sun 28 Nov 2021 ▪ 22h28 ▪ 3 min read — by Katie Donaldson

A speech on financial regulation of decentralised finance (DeFi) in Europe by Denis Beau, the first deputy governor of France’s central bank, was published on Sunday, 28th November. 

France is worried about DeFi

The bank’s official talked about developing central bank digital currencies (CBDCs), the Banque du France’s plan to introduce a digital euro, and future regulatory advances. Beau is sure that European regulatory watchdogs need to write more rules for the crypto market. 

“I’m referring in particular to the supervision of the development of decentralised finance, where the usual regulatory frameworks are constrained by the fact that issuers and service providers are not easily identifiable in an environment where protocols are automatically executed without intermediaries, and there is no fixed jurisdiction for the services offered,” he added.

The Markets in Crypto-Assets (MiCA) is one of the crypto regulation proposals that Beau brought up in his speech. However, the document doesn’t have any mentions of the DeFi sector. Instead it focuses on creating a framework for the issuance and services related to transferrable crypto assets, mainly calling on firms to be transparent in their operations through white papers submitted with any prospectuses and mandating that marketing be “fair” and “clearly identifiable” as ads. 

Beau said that in order to be effective, regulation must be multidimensional and coordinated at both national and international levels. 

“The introduction of a CBDC raises complex issues”

While talking about the CBDC development, the deputy governor stated that financial agencies must ensure that the digital euro will contribute positively to the European financial system and payments landscape.

In June, The Banque of France announced that it successfully completed an experiment with a Swiss bank to test cross-border settlements. The experiment tested CBDC issuance and settlements on a public blockchain through a smart contract simulation. The test was the last one out of eight CBDC experiments determining the viability of such currencies. The results are being used in developing a digital euro.

The Bank of France’s representative has expressed a desire to strengthen the grip over DeFi-related activities in Europe, as well as to continue contributing to the global CBDC conversation. 

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Katie Donaldson

I went full time crypto back in June 2018, and have never looked back. I want to help persuade as many people as possible to come and build the decentralised future! Let’s go!

DISCLAIMER

The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.

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