Cardano Foundation Urges EU to Clarify MiCA, Opposes Separate DeFi Rules

The Cardano Foundation is urging the European Union to clarify how existing crypto rules apply to decentralized finance (DeFi) and staking, while opposing separate regulatory regimes for those activities.

The foundation submitted its position on Sept. 30 and made it public Oct. 21 as the European Commission reviews the Markets in Crypto-Assets Regulation (MiCA). The framework began applying in part on June 30, 2024, and in full on Dec. 30, 2024.

The foundation wants regulatory duties to depend on what an identifiable operator does and how much control it has over customer assets or transactions. A business that holds client tokens or controls key parts of a service presents a different case from someone using a public blockchain directly. Supplying general-purpose software should not automatically make a developer a regulated service provider.

Cardano staking illustrates the distinction. On Cardano, ADA holders can delegate stake while retaining custody of and access to their tokens. The foundation draws a line between that activity and a business that takes custody of customer tokens or makes staking decisions on a customer’s behalf.

The Commission’s consultation asks whether DeFi needs additional safeguards. Options posed to respondents include checks by crypto service providers that connect customers to protocols and certification of protocols. Those questions have not changed the rules.

The review also covers gaps and overlaps in existing law. Tokens with more than one function can raise questions about whether MiCA or rules for financial instruments apply. The foundation also wants clearer treatment of stablecoins issued across jurisdictions and genuinely unique non-fungible tokens (NFTs).

Cross-border token ownership is one area where the foundation supports a targeted legal change. It wants clearer rules for deciding which country’s law governs ownership when tokens move across borders.

Other EU bodies are considering wider oversight. The European Banking Authority (EBA), the bloc’s banking regulator, has urged the Commission to consider regulating crypto-asset lending, including when service providers give customers access to DeFi lending protocols. That recommendation has not imposed new lending requirements.

The Commission is due to report on MiCA’s application by June 30, 2027. Its review may include a legislative proposal.