France’s regulator supports global DeFi rules.

France’s top regulator for financial markets, the Autorité des Marchés Financiers (AMF), has stated its support for globally coordinated regulations for decentralized finance (DeFi).

In a discussion paper released on Monday, the AMF, which issues licenses to cryptocurrency exchanges wishing to operate in the country, shared its “initial thoughts on the regulatory issues” raised by the decentralized and “disintermediated” protocols that make up the DeFi ecosystem.

The AMF attempts to define DeFi, as well as the decentralized governance systems known as DAOs and the automated “smart contracts” that govern transactions. The paper also raises associated risks and levels of control for discussion.

“Due to the cross-border nature and reach of DeFi activities, the AMF also supports the development of a global coordinated approach towards regulation to ensure a global level-playing field, which should both aim to protect investors and foster innovation,” the paper said.

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At a press conference in May, AMF Secretary General Benoit de Juvigny referred to the paper as a contribution to EU policy development on DeFi, while acknowledging that it will be “complicated” to categorize participants, unlike those found in traditional finance.

Global standard setters like the Financial Stability Board (FSB) are also seeking to establish standards for the DeFi sector, with a working group for international securities regulator IOSCO set to publish recommendations by the end of the year.

“The AMF fully supports these initiatives and intends to increase its engagement with stakeholders, both public and private, with a view to allowing the emergence of a balanced regulatory framework that will help support the sound development of decentralized finance in the long run,” the paper said.

While jurisdictions are increasingly regulating centralized cryptocurrency exchanges, DeFi protocols are difficult to supervise due to the apparent absence of a specific entity to target for compliance.

Industry stakeholders are invited to contribute to the AMF’s proposed discussion points until September 30.

Read more: What DeFi Must Sacrifice to Appease Regulators

Jack Schickler contributed reporting.

Edited by Sheldon Reback.

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