- Earlier this month, a top official from France’s central bank stated that the Bank of France seeks to have more control over DeFi (DeFi).
- Beau spoke about the evolution of crypto-focused policy in Europe, saying that “other regulatory changes will have to be made that are also very important.”
Earlier this month, a top official from France’s central bank stated that European authorities need to take a more active role in overseeing decentralized finance (DeFi).
The official from the bank discussed the development of central bank digital currencies (CBDCs), the Banque du France’s aim to launch a digital euro, and future regulatory developments.
Denis Beau, first deputy governor of the Banque du France, spoke about the development of central bank digital currencies (CBDCs) and his institution’s pilot program in this field in a lecture dated November 19 that the Bank of International Settlements published on Sunday. The European Central Bank is spearheading a long-term effort to launch a digital euro and France’s central bank is a participant.
Moreover, Beau believes that European regulators should write new regulations for the crypto sector which must be multifaceted and coordinated at both the national and international levels to be successful. One of the crypto regulatory concepts mentioned by Beau in his address is the Markets in Crypto-Assets (MiCA).
The DeFi sector, on the other hand, is not mentioned in the paper. Instead, it focuses on establishing a framework for the issuance and provision of services related to transferrable crypto assets. It primarily requires firms to be transparent in their operations through white papers submitted with any prospectuses and requiring that marketing be “fair” and “clearly identifiable” as advertisements.
“I’m referring in particular to the supervision of the development of decentralized 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.”
Beau didn’t elaborate on this point, but his argument reflects that of US regulators who have voiced a desire to tighten monitoring of DeFi-related activity.
Commissioner Hester Peirce of the Securities and Exchange Commission told The Block last year that DeFi will “challenge the way we regulate.”
The deputy governor emphasized that financial authorities must ensure that the digital euro would contribute favorably to the European financial system and payments landscape when discussing the CBDC development.
In June, the Banque de France declared that it had successfully completed a cross-border settlement trial with a Swiss bank. A smart contract simulation was used to evaluate CBDC issuance and settlements on a public blockchain. The test was the eighth and final in a series of CBDC studies to assess the feasibility of such currencies. The findings are being utilized to create a digital euro.