Cardano Foundation challenges proposed MiCA expansion into DeFi

• The Cardano Foundation has urged European regulators against extending MiCA rules to decentralised finance and staking.
• Its consultation response argues that regulation should focus on activities and risks rather than underlying technology.
• The submission raises concerns about how broader rules could affect decentralised protocols and blockchain participation across Europe.

The Cardano Foundation has urged the European Commission to reject broader MiCA rules for decentralised finance and staking.

The European Union’s Markets in Crypto-Assets Regulation (MiCA) is under review, including potential rules for activities currently outside its scope.

The Cardano Foundation said regulation should follow the substance of an activity, the functions performed and the risks created, rather than the technology used.

The foundation argues that regulators should target identifiable parties performing regulated functions and controlling assets or transactions.

On Cardano (ADA), holders can delegate stake without transferring custody or locking their tokens, the foundation said.

The submission also calls for clearer rules on stablecoins, NFT classification, cross-border token ownership and inconsistent national interpretations.

The foundation argues that overlapping requirements and high compliance costs could disadvantage smaller crypto businesses and emerging projects.

The submission calls for clearer, proportionate MiCA rules without expanding regulation solely because activities use blockchain technology.