The Autorité des Marchés Financiers (AMF) has stated that the strategy of “similar actions, similar dangers, similar 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 normal monetary sector. Regulators, subsequently, want to deal with dangers equivalent 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 typically transcend borders, the AMF referred to as for international cooperation in regulating the market. The dialogue paper, which articulates the regulator’s “preliminary pondering” 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 strategy in the direction of regulation to make sure a worldwide degree‐enjoying area, which ought to each goal to guard traders and foster innovation.”
Earlier this yr, the Monetary Stability Board stated it’s already working with international commonplace 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 tip of 2023.
The AMF stated 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. Latest market debacles just like the Terra-Luna crash have solely emphasised the dearth of readability within the area, the regulator famous.
In response to the AMF, DeFi “laws must 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 will probably 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. Alternatively, the area has to supply “sufficient ranges of investor safety,” the AMF famous.
The submit French regulator requires international coordination on “similar threat, similar regulation” coverage for DeFi appeared first on CryptoSlate.
