Cardano Foundation Urges EU Not to Extend MiCA to DeFi, Staking

The Cardano Foundation has asked the European Union not to expand the scope of the Markets in Crypto-Assets regulation, or MiCA, to cover decentralized finance and staking. It argues regulators should distinguish between direct participation in blockchain networks and financial services offered by intermediaries.Cointelegraph reported on October 21 that the foundation published a 19-page submission it sent to the European Commission on September 30. “Regulation should be designed based on the substance of the activity, the function performed and the risks involved, not the technology itself,” the foundation wrote.The foundation’s central argument is that what matters is who controls the assets. ADA holders can help secure the Cardano network without transferring custody of their assets to another party or locking up their tokens. That model, it said, should not be placed in the same regulatory category as staking services operated by intermediaries.The submission comes as the EU weighs broadening its oversight of crypto assets. The European Securities and Markets Authority recommended last month that additional safeguards be introduced for staking, lending and borrowing, and that services providing access to DeFi protocols be put into a separate regulatory category.The foundation also asked for clearer boundaries between MiCA and existing financial laws. Different interpretations by member states of the same business activity could make it harder for companies to predict regulatory requirements.The group is making a similar push in the US. On October 20, it sent a letter to the Securities and Exchange Commission with five other blockchain organizations, asking the agency to formally recognize digital commodities as non-securities.