Cryptoupdated 49m ago2 min read
Cardano Foundation Urges EU Not To Expand MiCA To DeFi And Staking
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Cardano Foundation urges EU not to extend MiCA to DeFi and staking. Regulation should be based on financial risks, not technology categories.
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Cardano Foundation fights MiCA
The Cardano Foundation formally submitted its position opposing any expansion of the European Union's MiCA crypto regulatory framework to cover decentralized finance (DeFi) and staking.
The foundation filed a 19-page position paper with the European Commission on Sept. 30 and published its contents in a blog post on Oct. 21 (local time).
The foundation argued that DeFi and staking are better governed within existing financial law, according to their function and risk, than through standalone new rules.
The foundation said, "Regulation should follow the substance of an activity, the function being performed and the risk being created — not the technology," and it urged regulators to draw a clearer line between MiCA and existing financial law.
The foundation warned that overlapping rules or diverging interpretations among member states would increase uncertainty for crypto businesses.
Custody is the dividing line
The Cardano Foundation stressed that direct participation in a decentralized network must be distinguished from financial services provided by intermediaries. The foundation cited Cardano users delegating ADA tokens to help secure the network, arguing that users do not hand over custody of their assets and that their tokens are not locked up. The foundation said such direct participation is fundamentally different in nature from staking services operated by intermediaries.
The foundation urged the EU to clarify how existing crypto rules apply to decentralized finance (DeFi) and staking while opposing separate regulatory regimes for those activities. The foundation wrote, "Regulation should follow the substance of an activity, the function performed and the risks involved, not the technology itself," as it argued that what matters is who controls the assets.
EU oversight and US push
The Cardano Foundation’s submission arrived as EU regulators widen their oversight of crypto services, with the European Securities and Markets Authority (ESMA) recommending additional safeguards for staking and lending and borrowing services.
“The Commission is due to report on MiCA’s application by June 30, 2027.”
The foundation also pointed to ESMA’s proposal of a new regulated service category for businesses that intermediate access to DeFi protocols.
The foundation said it joined five other blockchain organizations in a letter to the U.S. Securities and Exchange Commission (SEC) on Oct. 20, asking the agency to formally recognize digital products as non-securities under the SEC’s proposed crypto framework.
The foundation’s position also addressed MiCA’s implementation timeline, with the framework beginning applying in part on June 30, 2024, and in full on Dec. 30, 2024.
The foundation said the Commission is due to report on MiCA’s application by June 30, 2027, and it argued that the review may include a legislative proposal.