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DeFi

Cardano Foundation Raises Concerns Over MiCA DeFi Rules

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The Cardano Foundation expresses its objections to proposed regulations on DeFi and staking in its response to the MiCA consultation.

Cardano Foundation's Stance on MiCA Revisions

On October 21, 2026, the Cardano Foundation shared its concerns regarding new regulations proposed under the MiCA (Markets in Crypto-Assets) framework. Their official response, submitted on September 30, highlights issues related to decentralized finance (DeFi) and crypto staking.

Key Points from the Foundation's Response

  • The Foundation is against the introduction of distinct rules for DeFi and staking as outlined in MiCA.
  • It emphasizes the need to consider existing financial laws based on the function and risk rather than solely on technology.
  • A central part of their argument is the differentiation between direct user participation in a decentralized network and the services offered by intermediaries responsible for user assets.

Cardano advocates that ADA holders should be allowed to delegate their tokens without losing custody, arguing that this process should not be classified as an intermediary staking service.

The Importance of Defining Decentralization

Since its implementation on July 1, 2026, the MiCA standard excludes fully decentralized services from its regulatory scope. However, the European Securities and Markets Authority (ESMA) has raised concerns about the potential for “decentralization washing,” where projects masquerade as decentralized while having identifiable operators.

In its consultation, ESMA is pushing for a clear definition of DeFi to reduce ambiguity and to propose a regulated service for crypto-asset service providers that connect users to DeFi protocols.

Common Ground Between Cardano and ESMA

Despite some apparent differences, ESMA and Cardano share mutual understanding on certain aspects of crypto staking. ESMA recognizes that staking is integral to proof-of-stake networks and refrains from equating it outright with traditional lending or asset management.

With regard to staking, ESMA proposes specific obligations tailored to the role of intermediaries, including:

  • Transparency on rewards;
  • Definitions of lock-up periods;
  • Risks associated with “slashing”;
  • Clarification of fees;
  • Asset management in the event of insolvency.

The extent of these obligations would depend on how much control intermediaries have over users' digital assets.

Next Steps in the MiCA Consultation

As it stands, the MiCA consultation closed on September 30, and no legislative proposals have yet been finalized. The European Commission is currently reviewing the feedback received before determining a path forward regarding crypto regulations. A timeline for subsequent actions remains unspecified.

The dialogue between regulatory bodies and blockchain projects like Cardano continues to evolve, highlighting the need for careful consideration of the implications of regulations on innovation within the cryptocurrency space.

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