On October 12, the Autorité de Contrôle Prudentiel et de Résolution (ACPR), part of the French Central Bank, published a summary of its public consultation on a regulatory framework for decentralized finance (DeFi).
The public consultation lasted two months, from April to May 2023, in response to the first document discussing possible regulations for DeFi in the country. External contributions led the ACPR to startling revelations, especially regarding the structural persistence of centralization patterns:
“The ACPR therefore believes that the term ‘disintermediated’ finance is more appropriate than that of ‘decentralized’ finance.”
The operational risk of this “paradoxical high level of concentration” in DeFi concerns the physical infrastructure hosting blockchain nodes, in which cloud service providers play a central role.
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According to the summary, the “vast majority” of respondents argue that DeFi should continue to be deployed on public blockchains rather than private or permissioned blockchains. However, they admit that these blockchains need to be monitored regularly. Proposals to regulate intermediaries and certify smart contracts also met with broad consensus.
In conclusion, the ACPR finds it “advisable” to establish rules for the certification of smart contracts, define governance that would protect DeFi customers, and establish measures to support DeFi’s blockchain infrastructures.
On October 11, the European Securities and Markets Authority (ESMA) also weighed in on the DeFi discussion. In a 22-page report, ESMA admitted the promised benefits of DeFi, such as greater financial inclusion, the development of innovative financial products and the improvement of the speed, security and costs of financial transactions, while also addressing “significant risks” emphasized.
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