Cardano Foundation Urges EU Against New DeFi and Staking Regulations
The Cardano Foundation has called on the European Union to avoid creating new, separate regulations specifically for decentralized finance (DeFi) and staking. Instead, it argues that current financial laws should oversee these activities based on their actual functions and risks rather than the technologies involved.
On Wednesday, the foundation published a blog post detailing a 19-page submission made to the European Commission on September 30. The submission emphasized the need to differentiate between direct participation in decentralized networks and financial services provided by intermediaries, especially those where users’ assets are held or controlled.
"Regulatory measures should focus on the core nature of an activity, the functions it performs, and associated risks, rather than the technology used to carry it out," the foundation stated.
The organization highlighted that Cardano users can delegate their ADA tokens to support network security without handing over custody or locking their tokens. This type of engagement, the foundation argues, should be treated differently from staking services managed by intermediaries.
Furthermore, the foundation urged clearer distinctions between the EU's Markets in Crypto Assets Regulation (MiCA) and existing financial legislation, warning that overlapping obligations and differing interpretations among member states might cause uncertainty for crypto businesses.
This position coincides with ongoing discussions among European regulators about expanding oversight of crypto services. In September, the European Securities and Markets Authority recommended enhanced protections for activities like staking, lending, borrowing, and proposed creating a new regulated service category for firms facilitating access to DeFi protocols.
Beyond Europe, the Cardano Foundation has also advocated for increased regulatory clarity in the United States. Alongside five other blockchain groups, it co-signed an October 20 letter urging the US Securities and Exchange Commission to officially classify digital commodities as non-securities within its proposed crypto regulatory framework.
This stance by the Cardano Foundation highlights the importance of technology-neutral regulations and seeks to reduce legal uncertainties in the crypto sphere, ensuring that innovation and risk management are balanced under existing financial laws.
Why it matters
This approach aims to promote clear, function-based regulation that supports innovation in decentralized finance while minimizing legal ambiguity for market participants.
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