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ZEC $1,355 Cardano Foundation asks EU to refine MiCA rather than add DeFi rules
The foundation wants EU regulators to judge crypto activities by function and risk, not by the technology used to carry them out.
Key takeaways
- One submission, 19 pages. The foundation outlined its 19-page Sept. 30 submission to the European Commission in a Wednesday blog post.
- ESMA wants more safeguards. In September, ESMA recommended additional safeguards for staking, lending and borrowing and a new regulated category for DeFi access.
- A second push in the US. On Oct. 20, the foundation and five other blockchain organizations urged the SEC to recognize digital commodities as non-securities.
What happened
The Cardano Foundation has urged the European Union not to write new, standalone rules for decentralized finance and staking. It argues that existing financial laws should cover these activities based on their functions and risks, not the technology behind them. The foundation set out its position in a Wednesday blog post about its 19-page Sept. 30 submission to the European Commission.
The submission asks regulators to separate direct participation in decentralized networks from financial services run by intermediaries, especially where those intermediaries hold or control user assets. The foundation wrote that regulation should follow the substance of an activity, the functions performed and the risks created, not the technology used to conduct it.
Staking is a central example. The foundation said Cardano users can delegate their ADA tokens to help secure the network without giving up custody or locking their tokens. It wants that kind of participation treated differently from staking services run by intermediaries.
The foundation also called for clearer rules on hybrid tokens, stablecoins and NFTs, and for clearer boundaries between MiCA and existing EU financial legislation. It warned that inconsistent interpretations across member states and complex compliance demands could create difficulties for smaller crypto businesses.
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Why it matters
EU policymakers are reviewing how MiCA works in practice and considering whether activities outside its scope need more oversight. The European Commission opened its review in May to collect feedback from crypto businesses, financial institutions, regulators and other market participants.
The foundation's submission lands alongside a push for more oversight. In September, the European Securities and Markets Authority recommended additional safeguards for staking, lending and borrowing, plus a new regulated service category for firms that provide access to DeFi protocols.
The foundation argues that separate frameworks for activities on decentralized networks could add compliance work without addressing risks that existing laws already cover. It also wants requirements to reflect what a company actually does, how much control it has over customer assets and the risks involved.
The foundation recommended keeping direct participation in blockchain consensus separate from commercial staking services when deciding which obligations apply. It has also taken its case to the United States, joining five other blockchain organizations in an Oct. 20 letter urging the SEC to formally recognize digital commodities as non-securities under its proposed crypto framework.
What is still unclear
- The reports do not say how the European Commission or ESMA responded to the foundation's submission, or whether the EU will adopt any of its recommendations.
- The reports do not state when the Commission's review will conclude or when any changes to MiCA might be proposed.
Questions readers ask
What does the Cardano Foundation want the EU to change about MiCA?
It wants clearer rules on hybrid tokens, stablecoins and NFTs, and clearer boundaries between MiCA and existing EU financial legislation. It also wants regulators to judge activities by function and risk rather than by the technology used.
Why does the foundation say staking should be treated differently?
It says Cardano users can delegate ADA to help secure the network without giving up custody or locking their tokens. It argues that this differs from staking services run by intermediaries that hold or manage customer assets.
What did ESMA recommend for crypto oversight?
In September, ESMA recommended additional safeguards for staking, lending and borrowing. It also proposed a new regulated service category for firms providing access to DeFi protocols.
Has the Cardano Foundation raised similar points with US regulators?
Yes. On Oct. 20, it joined five other blockchain organizations in a letter urging the SEC to formally recognize digital commodities as non-securities under its proposed crypto framework.
