The Autorité des Marchés Financiers (AMF) has mentioned 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.
Nevertheless, the watchdog highlighted that DeFi poses extra dangers than the normal monetary sector. Regulators, due to this fact, want to handle dangers akin 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 known as for international cooperation in regulating the market. The dialogue paper, which articulates the regulator’s “preliminary considering” on DeFi regulation, famous:
“As a result of cross‐border nature and attain of DeFi actions, the AMF additionally helps the event of a world coordinated strategy in the direction of regulation to make sure a world stage‐enjoying discipline, which ought to each goal to guard traders and foster innovation.”
Earlier this 12 months, the Monetary Stability Board mentioned it’s already working with international normal 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 mentioned 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 companies 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 keeping with the AMF, DeFi “laws needs to 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 can be essential and doubly difficult for the DeFi sector. On the one hand, the sector has to discover a clear and safe technique of progress that encourages innovation. Then again, the area has to offer “satisfactory ranges of investor safety,” the AMF famous.
The submit French regulator requires international coordination on “similar danger, similar regulation” coverage for DeFi appeared first on CryptoSlate.