Cardano Foundation Urges EU to Keep MiCA Rules Off DeFi, Staking

The Cardano Foundation is urging European Union policymakers to avoid creating a fresh, stand-alone regulatory regime specifically for decentralized finance (DeFi) and staking. In a submission to the European Commission, the foundation argues that lawmakers should apply existing financial rules based on what an activity actually does and what risks it creates—rather than classifying the activity according to the underlying technology.

In a 19-page response posted Wednesday, the foundation also draws a line between users who directly participate in decentralized networks and intermediaries that package services around custody, asset control, or other forms of managed exposure. The distinction, it says, matters for how obligations under EU law should be structured.

Key takeaways

• The Cardano Foundation says DeFi and staking should be regulated by activity and risk, not by the technology used to deliver them.
• It calls for clearer separation between direct user participation and intermediary services, especially those involving custody or control of user assets.
• The submission warns that poorly aligned rules between MiCA and existing financial legislation could create uncertainty for crypto businesses operating across EU member states.
• Its position aligns with broader EU deliberations about expanding oversight for staking, lending/borrowing, and certain DeFi-related access services.

Substance over structure in EU crypto oversight

At the center of the Cardano Foundation’s argument is a principle it says EU regulators should adopt: regulation should follow the “substance of an activity,” including the functions performed and the risks created, instead of focusing on whether the activity is conducted through decentralized infrastructure.

In its response, the foundation emphasizes that not all crypto participation is equivalent from a legal and risk perspective. While decentralized networks enable users to participate directly, other models involve intermediaries that may manage keys, provide custody, or exercise control over users’ funds. According to the foundation, these two categories should not be treated identically.

The foundation’s stance also implicitly challenges a one-size-fits-all approach. If EU rules are written around “DeFi” as a label, the foundation argues, they risk capturing fundamentally different behaviors under the same regulatory umbrella—an outcome it believes would increase compliance complexity without necessarily improving consumer or market protection.

Delegation on Cardano vs. intermediary staking services

The submission highlights delegation as a concrete example of how the EU could distinguish between decentralized user involvement and intermediary-run services. The Cardano Foundation states that Cardano users can delegate native ADA tokens to help secure the network without surrendering custody or locking their tokens.

On that basis, it argues that this type of participation should be treated differently from staking services operated by intermediaries, where users may not retain the same level of control or custody. The distinction matters because EU regulatory obligations often become stricter when providers take custody, control assets, or manage key operational components on behalf of users.

For market participants, the underlying issue is whether regulators will define staking and participation primarily by user autonomy or by the broader system in which the staking outcome is produced. If the EU follows the Cardano Foundation’s framing, it could lead to more differentiated compliance paths for protocol users versus entities offering managed staking products.

MiCA overlap risk and member-state inconsistency

Beyond staking mechanics, the foundation’s response focuses on how MiCA interacts with other existing financial laws. It warns that overlapping requirements and inconsistent interpretations across EU member states could generate uncertainty for crypto businesses.

The foundation argues that regulators should provide clearer distinctions between what MiCA covers and what is already addressed under existing financial legislation. In its view, ambiguity about jurisdictional boundaries could lead to fragmented compliance standards—particularly for firms operating in multiple EU countries or building services that sit close to established categories such as financial intermediation or custody-related functions.

This is a practical concern for the industry: when firms cannot clearly map products and services to the governing legal framework, compliance costs tend to rise, and product design often shifts toward the least-regulated path rather than the most transparent one.

Broader EU scrutiny of staking and DeFi access

The Cardano Foundation’s regulatory message arrives as EU oversight discussions continue to evolve. In September, the European Securities and Markets Authority (ESMA) recommended additional safeguards for staking, lending and borrowing, and also suggested a new regulated service category for firms providing access to DeFi protocols.

That ESMA recommendation sets the stage for the kind of detailed boundary-setting the Cardano Foundation is calling for. ESMA’s approach—covering both risk mitigation measures and the possibility of a regulated category for certain DeFi-related access—suggests EU regulators are looking to address how users connect to decentralized protocols, not just how protocols function in isolation.

The Cardano Foundation’s submission effectively pushes back on the need for a new, standalone DeFi-and-staking framework. Instead, it advocates treating activities according to the financial role they play and the specific risks they introduce—an approach designed to align crypto services with established regulatory categories.

Regulatory clarity efforts extend beyond Europe

While the submission is aimed at the European Commission, the foundation’s push for clearer rules also has a transatlantic dimension. The Cardano Foundation joined five other blockchain organizations in an Oct. 20 letter urging the U.S. Securities and Exchange Commission to formally recognize digital commodities as non-securities under its proposed crypto framework.

That U.S. effort is separate from the EU process, but it reflects a common industry theme: participants want clearer legal definitions that reduce ambiguity and support consistent compliance across jurisdictions.

As the EU reviews the Cardano Foundation’s response, the key watch item is how regulators will draw lines between direct protocol participation and intermediary-managed services, and whether MiCA will be harmonized cleanly with existing financial laws. Those choices will determine how staking and DeFi access are likely to be structured—and what compliance burdens firms may face as EU oversight expands.