French Regulators Propose Platform Liability for Decentralized Finance

France's Treasury, the Autorité des marchés financiers (AMF), the Banque de France and the Autorité de contrôle prudentiel et de résolution (ACPR) proposed that crypto-asset service providers (CASPs) "should be liable for certain incidents affecting clients where they actively facilitated access" to decentralized finance (DeFi) protocols. The four French authorities published the proposal in a joint response to the European Commission's review of the Markets in Crypto-Assets Regulation (MiCA).

The joint response also proposes that platforms vet DeFi protocols before offering access to clients and monitor those protocols afterwards. France's recommendations remain proposals submitted during the MiCA review consultation process, and they would require legislative changes before becoming enforceable obligations.

What Platforms Would Answer For

Under the French proposal, platforms would be liable if they "fail to assess protocols properly or ignore known risks." The proposal does not establish automatic compensation for every DeFi exploit, so the liability France has in mind attaches to incidents affecting clients where platforms actively facilitated access to DeFi protocols.

The AMF said the DeFi framework "must incorporate safeguards for users: clearly assigned responsibilities for intermediaries," alongside due diligence obligations and protocol certification. Together with the duty to vet DeFi protocols before offering access and monitor them afterwards, those responsibilities would put platforms in charge of deciding which DeFi protocols their clients can reach.

Self-Custody Wallets Stay Outside the Net

The French authorities oppose blanket certification of self-custody wallet developers. They favor voluntary certification only for advanced DeFi-integrated wallets, which keeps ordinary self-custody wallet developers out of a blanket certification regime.

The French authorities have not said the DeFi proposals target Bitcoin or Bitcoin self-custody. The liability proposal is aimed at crypto-asset service providers (CASPs) that actively facilitated client access to DeFi protocols.

Proposals, Not Law

France's recommendations remain proposals submitted during the European Commission's MiCA review consultation process. They would require legislative changes before becoming enforceable obligations, so none of the French proposals is law, and no CASP is liable under them today.

Why It Matters

France is now trying to regulate decentralized finance, and its regulators proposing that platforms be liable for client incidents hands every intermediary an incentive to vet, restrict and gatekeep which DeFi protocols clients can reach. We think liability is how financial permission spreads, from the platform to whatever the platform touches, and regulators will come for Bitcoin next, but the honey badger will be ready. Bitcoin held in self-custody leaves no platform to hold liable and no intermediary to deputize, which is why your keys, not a certified gatekeeper, remain the one custody model a regulator cannot rewrite.