France wants exchanges liable for the DeFi they offer

France wants regulated crypto platforms that connect customers to decentralized finance to vet those protocols — and to be liable for some client losses if they don't. The proposal comes in a joint response to the European Commission's review of the MiCA regulation from France's Treasury, the markets regulator AMF, the Banque de France and the banking supervisor ACPR, Cointelegraph reported.

What Paris is asking for

• Due diligence before access: platforms would vet DeFi protocols before offering them and monitor them for vulnerabilities and suspicious activity.
• Certification of protocols and smart contracts, plus liability for certain incidents. Platforms could still offer uncertified protocols if they do their own checks and give stronger risk warnings.
• Proportionality: full duties for "significant" crypto-asset service providers (CASPs), lighter ones for smaller firms.
• Wallets: no blanket certification for self-custody wallet developers; voluntary certification for advanced wallets with built-in DeFi features.
• Wider MiCA changes: move supervision of significant CASPs to ESMA, lower the current 15-million-user threshold for "significant", and fold multi-currency stablecoins into the e-money token rules because no asset-referenced token has been authorised.

Our take

This is a clever way to regulate DeFi without regulating code. MiCA deliberately leaves fully decentralised services alone — see our explainer on what MiCA is — so France targets the one party that clearly is an intermediary: the exchange app with a "swap via DeFi" button. If an exchange earns fees steering users into a protocol, asking it to check that protocol first is hard to argue with.

The catch is incentives. Liability for third-party smart contracts is expensive to insure, so the likely first response is that big exchanges shrink their DeFi menus to a handful of audited, certified protocols. That protects retail users, but it could also push the most active traders straight to self-custody wallets, which France says should stay largely unregulated. New to how these protocols work? Start with what DeFi is.

What happens next

Nothing changes yet. The Commission's consultation feeds a report to EU lawmakers due by June 30, 2027, which may propose amendments. With hundreds of CASPs now on the MiCA register, the debate over who supervises the largest ones is only getting louder.