In Europe, the Markets in Crypto-Assets Regulation (MiCAR) aims to regulate crypto asset services but excludes non-custodial providers operating in decentralised finance (DeFi).
These providers, managing approximately $100 billion in locked value, currently evade AML laws, posing risks of fraud and financial crimes.
This regulatory gap highlights the challenge of balancing innovation with regulatory oversight.
The EU faces calls to update MiCAR to include non-custodial services and enhance consumer protection.
International collaboration is crucial to harmonise standards and manage risks effectively in the rapidly evolving digital finance sector.