On October 21, 2026, the joint French regulatory proposals recommended that crypto exchanges face liability for customer losses during protocol incidents when actively facilitating access to decentralized finance. The submission unites the French Treasury, the AMF, Banque de France, and the ACPR.
This position was submitted to the European Commission as part of its consultation assessing whether current market rules require targeted revisions. French regulators argued that service providers cannot remain immune from legal responsibility when directly connecting retail users to external smart contracts.
Existing European digital asset standards exclude fully decentralized mechanisms lacking formal intermediaries. Authorities in Paris contend this carve-out creates investor protection gaps whenever commercial platforms route client orders into decentralized protocols without conducting adequate due diligence.
Mandatory vetting and technical monitoring for decentralized protocols
The interagency document advises requiring licensed exchanges to vet protocols and smart contracts before offering access. Platforms would bear an ongoing duty to track operational vulnerabilities and detect suspicious on-chain transactions across all integrated decentralized applications.
Under the proposal, significant crypto-asset service providers would face comprehensive technical compliance duties, while smaller entities would manage scaled requirements. Platforms could still route orders to uncertified protocols, provided they conduct independent audits and deliver explicit risk disclosures to clients.
Assessing whether platforms maintain sufficient protection connects with the broader economic security of protocols, where governance flaws and oracle dependencies often exceed simple code vulnerabilities. Regulators avoided mandatory certification for non-custodial wallet developers, preferring voluntary standards for complex self-custody software.
Centralized European supervision for systemic market providers
Beyond decentralized finance, the French coalition urged shifting direct oversight of large crypto-asset service providers to the European Securities and Markets Authority. Regulators specifically suggested lowering the threshold of 15 million daily active users currently used to identify significant market entities.
French supervisors maintained that systemic significance should also account for custody assets, business risk profiles, and cross-border group complexity. Concentrating oversight at the European level aims to prevent inconsistent enforcement across disparate national competent authorities.
Such centralized oversight represents a structural evolution from the original European crypto assets regulation, which entrusted national supervisors with primary authorization powers while assigning coordinating functions to European bodies without direct day-to-day enforcement authority over domestic exchanges.
Restructuring stablecoin classifications and reserve rules
Addressing asset-referenced tokens, French officials highlighted that zero asset-referenced tokens received authorization under the current framework. Given this lack of market adoption, regulators proposed amending the e-money token structure to accommodate multi-currency stablecoins rather than maintaining an unused category.
This adjustment would streamline the regulatory pathway for multi-asset tokens while preserving stringent solvency safeguards. Officials emphasized that consolidating these instruments under e-money definitions prevents regulatory arbitrage across European jurisdictions.
The stablecoin recommendations arrive amid broader industry discussions regarding the stablecoin reserve rule debate, where market participants have debated liquidity concentration requirements that mandate high cash reserves in commercial banking institutions.
Additionally, French regulators called for clear European rules governing staking operations, where user assets are locked for network validation, alongside standardized consumer protection requirements for digital asset lending and borrowing facilities.
The European Commission will review these proposals to draft a legislative report by June 30, 2027, which will guide the European Parliament and the Council on potential amendments to update the digital asset regulatory framework.
This article is for informational purposes and does not constitute financial advice.
