EU regulators address DeFi contract certification in a summary of public feedback published by AMF & ACPR. This includes a summary of responses to the consultation on smart contract certification, conducted by a working group composed of industry experts, regulatory authorities, and technical specialists. It covers not only regulatory but also technical aspects related to standards, audit methods, and certification models.
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Do Regulators, Not Technology, Now Define Smart Contract Certification?
The working group on smart contract certification was established under the Fintech Forum, led by ACPR and AMF. Thisincludes proposals for shaping the core approaches to certifying software contracts used for executing, verifying, and enforcing transactions on the blockchain.
It covers three main areas:
- Technical standards. Security, governance, and alignment of provided functions across different execution environments.
- Audit methodologies. Analysis of existing practices and certification models (including audits by public authorities, third-party reviews, and self-certification).
- Regulatory approaches. Options ranging from voluntary to mandatory certification, with the possibility of differentiated application depending on the specific case.
Importantly, the regulator expects feedback, and stakeholders were allowed to submit comments to support the further development of the regulatory framework.
According to AMF, the responses helped clarify certain technical aspects and refine positions regarding the principles outlined in the working group’s report.
The majority of respondents supported the proposed technical standards, noting their consistency with industry practices. At the same time, some participants pointed out the need to further clarify certain provisions.
Regarding audit approaches, most responses confirmed the applicability of the models presented in the report. Respondents emphasized the importance of methodological clarity, as well as the need to consider the limitations and risks associated with different approaches.
While the regulatory dimension, participants emphasized the importance of distinguishing between different certification frameworks and expressed support for maintaining the procedures as voluntary.
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Conclusion
Even with mostly positive feedback, the formalization of smart contract audits may be perceived differently across stakeholders. On one hand, unified security standards are just as necessary in Web3 as they are in Web2.
On the other hand, a jurisdiction that is not a leading blockchain player, especially in light of recent U.S. advancements, is pushing to formalize auditing, while the DeFi industry and its underlying technology are evolving at an unprecedented pace. This could potentially slow down Web3 security research by imposing additional processes that offer little practical or timely value.
We’ll continue to closely monitor regulatory initiatives in technical security – it’s always an intriguing attempt. Stay tuned for the latest updates in crypto, blockchain, and DeFi.
