Loading article...
In a 19-page response to the European Commission, the Cardano Foundation argued that DeFi and protocol-level staking should not face standalone regimes under a MiCA expansion.
The Berlaymont building, seat of the European Commission. Photo via Wikimedia Commons. Source
The Cardano Foundation has urged the European Union not to create standalone regulations for decentralized finance and staking, arguing that existing financial laws should apply based on an activity's function and risk rather than the technology behind it.
In a blog post published Wednesday outlining its 19-page submission to the European Commission filed on Sept. 30, the foundation called for a clear line between direct participation in decentralized networks and financial services provided by intermediaries, especially where those intermediaries take custody or control of user assets. Cointelegraph and Cryptopolitan both reported the submission.
"Regulation should follow the substance of an activity, the functions performed, and the risks created, not the technology through which it is conducted," the foundation wrote. Senior legal counsel Benjamin Buergi signed the post.
The Commission's consultation asks whether activities that currently fall outside the Markets in Crypto-Assets Regulation (MiCA) should be brought into scope, including DeFi, staking, lending and borrowing, and some non-fungible token activity. The document is a consultation, not a legislative proposal.
The Cardano Foundation said ADA holders who delegate stake to help secure the network keep custody of their tokens and leave them unlocked, and argued that form of participation should be treated differently from staking services run by intermediaries. Providing general-purpose blockchain infrastructure or technical access to a network should not automatically count as a regulated financial service, the foundation wrote.
The response also pressed for clearer boundaries between MiCA and existing financial laws such as MiFID II. The foundation warned that overlapping requirements and inconsistent interpretations across member states create uncertainty for crypto businesses, and supported exemptions for genuinely unique NFTs. It also argued that a firm should not need a regulatory authorization merely because it provides blockchain infrastructure or network access.
The foundation's position runs against recommendations from several EU authorities. In September, the European Securities and Markets Authority recommended additional safeguards for staking, lending and borrowing, tighter rules for crypto promotions, and a new regulated service category for firms that provide access to DeFi protocols. ESMA also sought better criteria for judging whether a service is genuinely decentralized.
The EBA and ECB have backed EU-wide rules for crypto lending, borrowing and staking, according to a Freshfields summary of the agencies' responses. AMLA wants a legal definition of DeFi arrangements and clearer ways to identify who controls them.
A July report from the Financial Action Task Force, which Cryptopolitan cited, found that 132 of 143 reporting jurisdictions had not applied its standards to qualifying DeFi arrangements, and only two of 142 had licensed or registered one. FATF standards apply where someone exercises control or sufficient influence over an arrangement. FATF also linked two April 2026 attacks attributed to North Korea to more than $570 million in losses at the time of the report.
The Cardano Foundation has been active on both sides of the Atlantic. On Oct. 20 it joined five other blockchain organizations in a letter urging the U.S. Securities and Exchange Commission to recognize digital commodities as non-securities under the agency's proposed crypto framework. Cointelegraph separately reported that letter, which also involved Chainlink and other protocol groups.
Euro-denominated spot trading in crypto reached €362 billion in 2025, up 31% from the prior year, according to Kaiko research. A 2026 academic study cited in the same account found no clear impact of MiCA milestones on crypto prices. The Commission has not published draft legislation from the review, and the foundation's submission is one of many consultation responses now under review.
Circle, Aave and more than 50,000 EU citizens have separately objected to a proposed restriction on stablecoin yields tied to borrowing, lending and staking activity, Cryptopolitan reported. That pushback focuses on rewards to participants rather than on direct participation in a proof-of-stake network, which is the ground the Cardano Foundation is staking out.