Existing regulatory frameworks ‘constrained’ by DeFi characteristics


A senior official for France’s central bank said earlier this month that regulators in Europe need to more directly supervise decentralized finance (DeFi).

In a speech from November 19 that was published Sunday by the Bank of International Settlements, Denis Beau, first deputy governor of the Banque du France, primarily focused on the development of central bank digital currencies (CBDCs) and his institution’s pilot program in this area. France’s central bank is also a participant in the long-term project to potentially introduce a digital euro, an initiative being spearheaded by the European Central Bank.

During his remarks, Beau commented on the development of crypto-focused regulation in Europe and remarked that “other regulatory changes will have to be introduced which are also very important.” 

Beau went on to say:

“I’m referring in particular to the supervision of the development of decentralised finance, where the usual regulatory frameworks are constrained by the fact that issuers and service providers are not easily identifiable in an environment where protocols are automatically executed without intermediaries, and there is no fixed jurisdiction for the services offered.”

One of the regulatory proposal referenced by Beau, the Markets in Crypto-Assets (MiCA), does not contain any provisions specific to DeFi. 

Beau didn’t comment further on this particular topic, but his contention echoes those made by regulators in the United States who have also expressed a desire to strengthen oversight of DeFi-related activities. 

Securities and Exchange Commission commissioner Hester Peirce told The Block last year that DeFi would “challenge the way we regulate.”

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