France Wants Crypto Platforms Liable for Some DeFi Security…

France's financial authorities have proposed making regulated cryptocurrency platforms liable for certain losses arising from decentralized finance (DeFi) protocols they provide access to, potentially extending investor protections beyond the European Union's existing Markets in Crypto-Assets Regulation (MiCA).The proposals, published on October 21, were submitted jointly by the French Treasury, Financial Markets Authority (AMF), Banque de France and Prudential Supervisory and Resolution Authority (ACPR) as part of the European Commission's review of MiCA. Under the proposed framework, crypto-asset service providers (CASPs) would face new responsibilities for assessing protocol security, monitoring vulnerabilities and protecting customers from identifiable risks. The recommendations are not binding rules. They will inform the Commission's assessment of whether MiCA should be amended to cover activities currently outside its regulatory perimeter.

When Would Crypto Platforms Become Liable for DeFi Losses?

France's proposal focuses on regulated intermediaries that actively connect customers to decentralized protocols, rather than imposing uniform licensing requirements on decentralized applications themselves. MiCA currently excludes crypto-asset services provided in a fully decentralized manner without an intermediary. French authorities argue that regulated platforms offering customers access to these services should nevertheless bear responsibilities for how those connections are established and maintained. “CASPs should be liable for certain incidents affecting clients where they actively facilitated access,” the authorities said. Platforms would be expected to conduct due diligence before connecting customers to DeFi protocols and continue monitoring them for security weaknesses and suspicious activity. The proposed framework also supports certification of protocols and smart contracts. Platforms could still offer access to uncertified applications if they conduct independent assessments and provide enhanced risk disclosures. Requirements would apply fully to significant CASPs, with proportionate obligations for smaller providers. The debate follows Malta's earlier examination of whether DeFi protocols retaining centralized controls should fall under MiCA, illustrating regulators' growing attention to the intermediaries connecting users with decentralized markets.

Investor Takeaway

Making platforms responsible for certain DeFi incidents could increase compliance and legal costs for exchanges offering integrated lending, swapping or yield services. It could also encourage platforms to restrict access to protocols they consider difficult to assess or monitor.

Could DeFi Compliance Become a Competitive Barrier?

Protocol assessments, continuous monitoring and security certification would introduce recurring costs for platforms integrating decentralized financial applications. Large exchanges may be better equipped to absorb these requirements through dedicated compliance, blockchain analytics and security teams. Smaller providers could face greater pressure to limit their offerings or rely on certified protocols. The framework could consequently favor established platforms and protocol developers capable of demonstrating stronger security controls, although certification would not eliminate smart-contract or operational risks. For non-custodial wallet developers, France opposes blanket certification requirements. Instead, the authorities favor voluntary certification for more advanced wallet products integrating DeFi functionality. This distinction would preserve a lighter approach to basic self-custody while imposing greater responsibilities on intermediaries actively directing customer funds into DeFi applications.

Why Does France Want Stronger ESMA Supervision?

France also supports transferring direct supervision of significant crypto-asset service providers from national regulators to the European Securities and Markets Authority (ESMA). Under Article 85 of MiCA, CASPs are currently classified as significant when they average at least 15 million daily active users in the EU over a calendar year. France proposes lowering that threshold and considering additional indicators, including assets under custody, business risks and corporate group complexity. The changes could bring more exchanges and institutional crypto businesses under centralized European supervision, reducing differences in regulatory treatment across member states. ESMA has already increased scrutiny of authorized providers. As FinanceFeeds previously reported, the regulator launched a coordinated review of crypto custody safeguards in July 2026.

Investor Takeaway

A lower significance threshold could expose more crypto businesses to enhanced European oversight. Regulatory scale may increasingly influence market access, especially for platforms operating across multiple EU jurisdictions.

What Else Could Change Under MiCA?

The French authorities also want the EU to reconsider its framework for asset-referenced tokens (ARTs), a stablecoin category covering tokens that reference multiple assets or combinations of assets. With no ART issuers authorized under MiCA at the time of the authorities' review, France proposed examining whether the existing framework is commercially appropriate and adapting e-money token rules to accommodate multicurrency stablecoins. The absence of authorized ART issuers was previously examined by FinanceFeeds in its analysis of ESMA's licensing register. The proposals also address stablecoin issuance across jurisdictions, supervisory cooperation and clearer rules for staking, crypto lending and borrowing. The broader review follows the European Commission's consultation launched in May, which sought industry feedback on extending MiCA to decentralized finance and other emerging crypto activities. The Commission must submit its report on MiCA's application to EU lawmakers by June 30, 2027, potentially accompanied by legislative proposals. Until amendments are formally adopted, France's recommendations do not establish new liability obligations. Their commercial impact will depend on which provisions the Commission advances and how EU lawmakers ultimately define the responsibilities of regulated DeFi intermediaries.

Investor Takeaway

The June 2027 review is the next major legislative milestone. Investors should distinguish proposed supervisory changes from existing requirements, particularly when assessing the regulatory exposure of exchanges, stablecoin issuers and DeFi service providers.