Can EU improve MiCA without new rules? Cardano Foundation makes its case

MiCA, the EU's Markets in Crypto-Assets Regulation, came into force in 2024 as the bloc's first comprehensive crypto rulebook, covering issuers and crypto-asset service providers while leaving decentralized finance and staking largely untouched. The European Commission opened a consultation this year to review how the framework is working before deciding whether to widen it. The Cardano Foundation, which stewards the Cardano network, filed its response on September 30, arguing for refinement over expansion.

If Brussels folds DeFi and staking into MiCA, protocols and validators could face licensing and passporting obligations similar to those now borne by centralized exchanges and custodians. Smaller development teams and liquidity providers would absorb compliance costs that incumbent, already-licensed crypto-asset service providers can spread across larger balance sheets. The Cardano Foundation's preferred path, tightening existing MiCAR provisions instead, would leave staking and DeFi operators outside licensing requirements for now, sparing them new registration and reporting duties.

The submission reopens a familiar fight over whether rules should track technology or financial risk. Regulating by risk, as the foundation urges, would exempt genuinely decentralized activity from rules built for intermediaries, but critics worry this lets protocols with real custodial control dodge oversight by calling themselves decentralized. Regulating by technology instead risks dragging code with no identifiable operator into a licensing regime designed for firms, not software. (per cointelegraph.com)

The outcome hinges on how the European Commission weighs industry submissions like this one once its MiCAR consultation, closed to responses as of September 30, feeds into a formal review. A decision to extend MiCA's scope to DeFi and staking would mark a significant expansion of EU crypto oversight; a decision to merely tighten existing provisions, as the Cardano Foundation wants, would keep today's boundary between regulated intermediaries and unregulated protocols intact.

The move was larger before the first headline than after. That is an observation, not an explanation: the market also moves on things nobody publishes.