The Cardano Foundation has urged the European Union to avoid creating standalone regulations for decentralized finance and staking as regulators consider MiCA expansion. The foundation wants existing financial laws applied according to an activity’s functions and risks, with a clear distinction between direct network participation and services operated by intermediaries.
Key Takeaways
- The foundation argues that regulation should depend on financial functions and risks, not the technology used.
- It says direct ADA delegation differs from intermediary staking because users retain custody and do not lock their tokens.
- ESMA recommended additional safeguards in September, but those recommendations are not enacted rules.
Table of Contents
- MiCA expansion raises the question of who controls assets
- Foundation seeks clearer boundaries between existing laws
- Conclusion
MiCA expansion raises the question of who controls assets
The foundation set out its position in a 19-page submission to the European Commission dated Sept. 30, summarized in a blog post on Wednesday, Oct. 21. Its central request is to separate people participating directly in decentralized networks from businesses providing financial services, particularly when those businesses hold or control customer assets.
Cardano’s staking model is its example. The foundation said holders can delegate ADA to help secure the network while keeping custody of their tokens and without locking them. It argues that this arrangement should not receive the same regulatory treatment as staking offered through an intermediary.
Foundation seeks clearer boundaries between existing laws
The submission also asks for clearer boundaries between the Markets in Crypto Assets Regulation, known as MiCA, and other financial legislation. The foundation warned that overlapping obligations and differing interpretations among EU member states could leave crypto businesses uncertain about which requirements apply.
That position comes as European regulators weigh broader oversight. In September, the European Securities and Markets Authority recommended extra safeguards for staking, lending and borrowing, alongside a new regulated service category for companies providing access to DeFi protocols. Those recommendations and the foundation’s submission represent positions in the regulatory debate, rather than completed changes to EU law.
Conclusion
The foundation’s request centers on regulatory distinctions: assess what a service does and who controls the assets, rather than treating all DeFi and staking activity alike. EU regulators are still considering how oversight should develop.
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