Cardano Foundation Opposes EU Expansion of MiCA Regulations to DeFi and Staking
Written with artificial intelligence.
The Cardano Foundation has called on the European Union to avoid creating separate regulations for decentralized finance (DeFi) and staking. They argue that existing financial laws should apply based on the risks involved rather than the technologies used, warning that overlapping regulations could lead to uncertainty for crypto businesses in the EU.
Call for Regulation Based on Risk
The Cardano Foundation has urged the European Union (EU) to refrain from introducing new regulations specifically for decentralized finance (DeFi) and staking. In a blog post detailing a recent submission to the European Commission, the foundation emphasized that regulation should focus on financial risks rather than the technologies involved.
Distinction Between Activities
The foundation advocates for a clear differentiation between direct involvement in decentralized networks and financial services provided by intermediaries. They point out that Cardano users can delegate their native ADA tokens to help secure the network without losing custody, which should be treated differently from staking services offered by third parties.
Concerns Over Overlapping Regulations
In their submission, the Cardano Foundation warned that the proposed expansion of the EU's Markets in Crypto Assets Regulation (MiCA) could result in overlapping requirements and inconsistent interpretations among member states. Such scenarios could create uncertainty for crypto businesses operating in the EU.
Broader Regulatory Clarity Efforts
This appeal comes as EU regulators consider increasing oversight of crypto services. In September, the European Securities and Markets Authority (ESMA) suggested additional safeguards for staking, lending, and borrowing, including a new category of regulated services for firms accessing DeFi protocols. The Cardano Foundation is also advocating for clearer regulatory conditions in the United States, emphasizing the need for the SEC to classify digital commodities as non-securities under its proposed framework.