France's Regulators Ready to Outpace EU with DeFi and Crypto Clampdown

France’s financial watchdogs are signaling a potential regulatory overhaul for the cryptocurrency and decentralized finance (DeFi) sectors, with the Autorité des Marchés Financiers (AMF) and the Banque de France (ACPR) indicating plans to impose stricter oversight than the EU’s Markets in Crypto-Assets (MiCA) framework. The new measures, which could be implemented as early as late 2025, aim to address liquidity risks, investor protection concerns, and the evolving nature of DeFi platforms.

Under the proposed rules, crypto asset service providers will face enhanced capital adequacy requirements, with minimum reserves expected to be significantly higher than the 1.5% stipulated under MiCA. Additionally, firms offering decentralized services will be required to register with the AMF, even if they operate without a central entity. This marks a departure from the more flexible approach taken by the European Union, which is still in the final stages of implementing MiCA.

The AMF and ACPR have also indicated that stablecoins will be subject to more rigorous scrutiny, particularly concerning their backing and redemption mechanisms. Regulators expressed concerns that the lack of transparency in some stablecoin reserves could pose systemic risks to the broader financial system. As a result, any stablecoin operating in France may need to meet specific liquidity and audit requirements.

DeFi platforms, which typically operate without a central authority, are also under the regulatory spotlight. The AMF has hinted at the introduction of a new licensing regime for entities offering automated financial services through smart contracts. This would require DeFi actors to comply with know-your-customer (KYC) and anti-money laundering (AML) obligations, similar to traditional financial institutions. Some industry observers warn that such measures could hinder innovation and drive DeFi activity to more lenient jurisdictions.

The regulatory shift comes amid a broader global trend toward increased scrutiny of crypto assets. While the EU continues to push for a harmonized approach through MiCA, France is moving to impose a more stringent national framework. The AMF and ACPR argue that the rapid evolution of crypto markets necessitates a proactive stance to protect investors and maintain financial stability.

Industry stakeholders remain divided. While some welcome the increased clarity and investor protections, others caution that the new rules may create compliance burdens for smaller firms. Legal experts suggest that the regulatory landscape is still in flux, and any final regulations will likely be subject to further revisions based on stakeholder feedback. The outcome will have significant implications for the structure, operations, and competitiveness of French crypto and DeFi businesses in the global market.