François Villeroy de Galhau, Governor of the Banque de France
On the occasion of Fintech Forum of theACPR and theAMFon Governor of the Banque de France quoted the two new frontiers to better masterwhose crypto-assets. With MiCA 2, l’issue will be to process conglomerates and the DeFi.
The French Fintech Week is underway, and once again this year, the sector’s two regulators, theAMF and theACPR. Governor of the Banque de France, but also Chairman of the ACPR, François Villeroy de Galhau opened the meeting.
His speech was an opportunity for him to return to two “new frontiers that we need to control better together”: climate risks and crypto-assets, which encompass tokenized finance. On the subject of crypto, the ACPR boss called for “a collective effort”.
The tokenization of finance
Blockchain technology, which was born out of the crypto-asset ecosystem, could, I would stress, bring undeniable benefits to the operation of financial markets in terms of transparency or immediacy,” says François Villeroy de Galhau.
These benefits, he continues, will only be possible if the risks are kept under control and developments supported. The authorities’ response in this sector is to implement the pilot scheme.
Participants in a round table discussion on tokenization, which included Natasha Cazenave (Executive Director of ESMA) and Claudine Hurman (Director of Innovation at the Banque de France), nevertheless highlighted the slow start of this regime.
Crypto conglomerates and DeFi on the MiCA 2 menu
On the subject of regulation this time, the central bank governor returned to Europe’s “unfortunate” lead “over other major jurisdictions” with the adoption of MiCA.
This lead could become even more pronounced. “We want and are preparing a future MiCA 2 regulation”, he says. And why such haste? Because “at least two subjects” deserve to be addressed, namely crypto conglomerates.
These groups, with their many subsidiaries, activities and geographical locations, should be subject to transparency rules, particularly with regard to the presentation of consolidated accounts.”
And François Villeroy de Galhau refers to “several cases that have come to light in the United States”, which point to “the interplay between different entities and jurisdictions” central to “the opacity and possible misappropriations within these conglomerates”.
DeFi “is decentralized in name only”.
Binance will not be cited here, but its name stands out. Faced with these conglomerates, the head of BdF insists on the merits of sharing information between jurisdictions. The other central theme of MiCA 2 is DeFi.
But, just as he doesn’t relish the term crypto-currency, François Villeroy de Galhau doesn’t get behind the translation decentralized finance.
We prefer the term disintermediated finance.”
This term is considered “more appropriate”, in particular because of “the high level of centralization observed in practice. This type of finance is decentralized in name only”. A European report on DeFi is expected at the end of 2024.
This sector of 2 million users and $40 billion in value (or 5% of the crypto market) has depreciated sharply since the end of 2021 ($180 billion) following bankruptcies and a fall in token prices.
In-depth certification of smart contracts
“Its size is small” and its “use cases limited”, qualifies the governor. So why are regulators so interested? Because of the “numerous” risks involved, including theft by individuals, but above all because DeFi “could foreshadow future transformations in the world of finance”.
Last week, the ACRP published the results of its consultation, and François Villeroy de Galhau expressed his satisfaction with the participation and quality of the responses.
Further action is already planned. In the coming weeks, the AMF and ACPR will launch a joint working group on the certification of smart contracts.
Respondents seem to be particularly interested in this avenue”, he explains.
However, this observation needs to be qualified. Yes, the principle of smart contract certification enjoys “broad approval”, according to the ACPR. On the other hand, the practical details “are more open to debate”.
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