While U.S. regulators crack down on the crypto industry, the opposite is happening abroad. The latest sign that jurisdictions outside of the U.S. are seeking a friendlier approach comes from France.
The Autorité des Marchés Financiers (AMF), the regulatory body that oversees French financial markets, published a paper that “aims to provide a definition of what constitutes DeFi, providing a high‐level overview of the sector.” The document includes insight into trends and risks in the industry.
Pressure from U.S. regulators is pushing businesses abroad as conditions prove more conducive to development and fundraising. From Europe to Asia, legislators are seeking to capitalize on the U.S.'s loss by driving a growing industry to their shores with friendlier–or at the very least clearer–regulation.
The French Connection
In its document, the AMF indicated support for “the development of a global coordinated approach towards regulation to ensure a global level‐playing field, which should both aim to protect investors and foster innovation.”
“With DeFi still being at an early stage of development, yet evolving rapidly as a sector, legislation should be thought in a progressive and proportionate manner, taking into account, on the one hand, the benefits to innovation displayed by DeFi activities and governance models, while on the other considering the risks they pose to participants,” said the document.
Still, with DeFi platforms come broad risks regulators must take into account, such as anti-money laundering and counter-terrorist financing compliance and any due diligence around know-your-customers (KYC) rules, according to the AMF.
For regulators, the AMF said the challenge is two-fold. “Allowing for the development of transparent and secure means to help grow the ecosystem and encourage innovation on the one hand, whilst providing adequate levels of investor protection on the other.”
In an effort to open lines of discussion with public and private ecosystem stakeholders and “foster the development of a balanced regulatory approach,” the AMF is seeking feedback on the paper before Sept. 30.
Hong Kong Research
To potentially capture a share of the crypto business, Hong Kong regulators have already proceeded to put into effect legislation designed to entice newcomers and serve a large existing base of digital asset firms.
A Hong Kong legislators-sanctioned study focused on worldwide efforts to accelerate Web3 development in a number of countries identified as “regional hubs” including Japan, Singapore, South Korea, and the United Arab Emirates.