Cardano Foundation Urges EU to Exclude DeFi From MiCA

The Cardano Foundation has urged European Union policymakers to avoid introducing new regulatory frameworks for decentralized finance and staking, advocating instead for improvements to the existing Markets in Crypto-Assets regulation. In its September 30 response to a European Commission consultation, the organization argued that regulators should focus on refining current digital asset rules and ensuring consistent application across member states.

Separating Infrastructure From Financial Services

A primary issue highlighted by the Foundation involves distinguishing decentralized blockchain infrastructure from financial services provided by identifiable intermediaries. The Foundation argued that regulatory requirements should be based on an entity's specific actions, degree of control over customer assets, and associated operational risks. Providing software or blockchain infrastructure should not automatically qualify as offering a regulated financial service, according to the group.

The submission placed particular emphasis on staking activities. On Cardano, holders of ADA can delegate their stake to support consensus without relinquishing token custody or locking assets. The Foundation contrasted this non-custodial participation with commercial staking services managed by intermediaries, which often involve discretionary management or custody arrangements, recommending that direct blockchain consensus participation be treated separately from commercial operations.

Interplay With Existing Financial Rules

The consultation response also addressed how MiCA coordinates with traditional EU frameworks, specifically the Markets in Financial Instruments Directive II. The Foundation supported keeping digital assets and traditional financial instruments distinct, while seeking clearer guidelines for hybrid tokens and assets that risk differing interpretations across member states. The organization also recommended retaining MiCA exemptions for unique non-fungible tokens, arguing that membership in an NFT collection should not automatically classify an asset as fungible.

Key facts

• The Cardano Foundation submitted its consultation response to the European Commission on September 30.
• The group called on regulators to distinguish direct blockchain participation and staking from custodial intermediary services.
• The Foundation advocated for clearer guidelines on hybrid tokens, stablecoins, and environmental disclosures without introducing separate DeFi rules.
• The European Commission initiated its review process in May to evaluate whether activities outside MiCA require additional oversight.