France has put forward a set of changes to the European Union's crypto rulebook that would force crypto exchanges to run checks on DeFi protocols. Under the plan, exchanges could be held liable for certain customer losses connected to DeFi access. The proposal is framed as an amendment to existing EU crypto rules, not a standalone French law.
What Paris actually wants
The core of the proposal is a shift in responsibility. Instead of treating DeFi as a separate corner of the market that users reach on their own, France wants the exchanges that serve as the on-ramp to carry some of the risk. If a customer loses money through a DeFi protocol accessed via an exchange, the platform could face liability for those losses.
That's a meaningful change in how the EU's crypto framework would treat the boundary between centralized platforms and decentralized ones. Exchanges have generally argued they're a doorway, not a guarantor. The French proposal effectively rejects that position, at least for some cases.
The checks it would require
Exchanges would have to conduct checks on DeFi protocols. The facts here are thin on exactly what those checks look like, and that's the part the industry will be watching. A due-diligence regime could mean anything from basic screening to ongoing monitoring of protocol behavior and smart-contract risk.
The proposal doesn't spell out a separate French licensing scheme or a new national law. It works through the EU crypto rule changes already in progress, which means the fight over the details will play out at the Brussels level rather than in Paris.
Why exchanges will push back
Liability is the sticking point. Once a platform is on the hook for customer losses tied to DeFi, the math changes. Exchanges will either have to build out compliance teams to vet protocols, restrict which ones customers can reach, or price the risk into their services. None of those options is cheap, and restricting access runs against the open-access pitch that drew users to DeFi in the first place.
There's also the practical question of causation. A loss on a DeFi protocol can come from a smart-contract exploit, a token collapse, or a user's own transaction. Untangling which of those an exchange should answer for is the kind of thing that ends up in court. The proposal's language on "certain customer losses" leaves room for interpretation, and that ambiguity cuts both ways.
What comes next in Brussels
The proposal now enters the EU process, where it will be negotiated alongside other member states' positions. France has made its opening bid. The concrete next step is how the other member states and the European Parliament respond to the liability language, and whether the checks on DeFi protocols get defined tightly or left to regulators to fill in later.
For exchanges operating in the EU, the operative question is timing. If the liability provision survives negotiations in something close to its current form, platforms will need to decide how they handle DeFi access well before any compliance deadline. That debate starts now, not at the end of the process.
