Cardano’s 19-page EU reality check: No standalone box for DeFi or staking

The Cardano Foundation has urged the European Union not to introduce new, standalone regulations for decentralized finance and staking, arguing that existing financial laws should govern such activities according to their functions and risks rather than the technology used.

The foundation detailed its position in a Wednesday blog post outlining a 19-page Sept. 30 submission to the European Commission. It called for a distinction between direct participation in decentralized networks and financial services supplied through intermediaries, particularly when custody or control of users’ assets is involved. “Regulation should follow the substance of an activity, the functions performed, and the risks created, not the technology through which it is conducted,” the foundation wrote.

The foundation said Cardano users can delegate their native ADA (ADA) tokens to help secure the network without surrendering custody or locking their tokens. It argued that this form of participation should be treated differently from staking services operated by intermediaries.

The Sept. 30 submission also sought clearer boundaries between the European Union’s Markets in Crypto Assets Regulation (MiCA) and existing financial laws. The foundation warned that overlapping requirements and inconsistent interpretations across member states could create uncertainty for crypto businesses. Its intervention comes as EU regulators consider expanding oversight of crypto services; in September, the European Securities and Markets Authority (ESMA) recommended additional safeguards for staking, lending and borrowing, alongside a new regulated service category for firms providing access to DeFi protocols.

Across the Atlantic, the Cardano Foundation has also pressed for greater regulatory clarity, joining five other blockchain organizations in an Oct. 20 letter urging the US Securities and Exchange Commission (SEC) to formally recognize digital commodities as non-securities under its proposed crypto framework. Related magazine coverage asks, “Can the SEC and CFTC’s pro-crypto rules be overturned?”