Innovation and Regulation: SDF's Response to French Regulators


Gabriel Bizama

Publishing date



In response to a discussion paper on DeFi published by the Autorité des Marchés Financiers (AMF), a French financial regulator, the Stellar Development Foundation (SDF) has submitted a comprehensive response, underlining our commitment to shaping an appropriate global regulatory framework for DeFi. Our response proposes that a well-designed regulatory framework can fuel innovation, competition, and consumer protection, particularly by harnessing the benefits of open source technology, which fosters interoperability and prevents power consolidation in the hands of a few major players.

SDF's response delves into the significance of open source software in the digital world. Open source code is the foundation of most software and enables rapid development, security, and community-driven improvements. Open source projects, including public blockchains like the Stellar network, provide platforms that anyone can use, leading to competitive markets that benefit users and lower barriers to entry.

Additionally, SDF addresses smart contracts and their role in the evolving regulatory landscape for digital assets in Europe. The response walks through how the Stellar network smart contract platform, Soroban, is one example of how this technology can be deployed to alleviate a variety of common barriers to financial access like credit and operational risk, distance, and service accessibility by allowing builders anywhere to create platforms and products for anyone to use.

Lastly, SDF shares insights on decentralization, which the response argues is a spectrum rather than a binary choice between “centralized” and “decentralized.” SDF advocates for a multi-factor framework to evaluate a blockchain network's degree of decentralization. Assessment of various aspects such as governance and network architecture can be used to determine where a project, idea, or company falls on that spectrum and whether power is appropriately distributed across a network. This framework is designed to give policymakers, regulators, and lawmakers the tools to gauge decentralization and design approaches for the industry that encourage growth and innovation.

SDF is committed to continued engagement with European and French regulators, and to shaping a comprehensive and effective legal and regulatory framework for DeFi and smart contracts through open discussion, collaboration, and education. To read the full paper, click here.