Simplify financial decision-making

The French Central Bank’s regulatory body, the Autorité de Contrôle Prudentiel et de Résolution (ACPR), has published a summary of its public consultation on decentralized finance (DeFi). The consultation, which took place from April to May 2023, revealed surprising findings about the persistence of centralization in DeFi. The ACPR suggests that the term “disintermediated” finance is more appropriate than “decentralized” finance due to the high degree of concentration in the sector. The operational risk lies in the physical infrastructure hosting blockchain nodes, with cloud service providers playing a central role. The majority of respondents to the consultation believe that DeFi should be deployed on public blockchains and not private or permissioned ones. However, they also acknowledge the need for regular audits of these blockchains. There is broad consensus on the regulation of intermediaries and the certification of smart contracts. The ACPR recommends the establishment of rules for smart contract certification, the definition of governance to protect DeFi customers, and measures to support DeFi’s blockchain infrastructure. In a separate report, the European Securities and Markets Authority (ESMA) also weighed in on the discussion on DeFi. While acknowledging the benefits of DeFi, such as financial inclusion and innovation, the ESMA also highlighted the significant risks involved. Overall, the ACPR and ESMA recognize the potential of DeFi but emphasize the importance of regulation and risk management in this rapidly evolving sector.

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Information	Details
Geography	Europe
Countries	🇫🇷
Sentiment	neutral
Relevance Score	1
People	None
Companies	Autorité de Contrôle Prudentiel et de Résolution (ACPR), European Securities and Markets Authority (ESMA), cloud service providers, French Central Bank
Currencies	None
Securities	None