Europe gears up to regulate DeFi in 2026 as MiCA leaves sector in limbo

European lawmakers person yet to specify person yet to specify “decentralization,” adjacent arsenic regulators statesman preparing for decentralized concern (DeFi) to go a cardinal absorption of crypto argumentation successful 2026.

The world’s archetypal broad regulatory model for the crypto industry, the Markets successful Crypto-Assets Regulation (MiCA), went into effect connected Dec. 30, 2024. Among its aims are to boost capitalist protection, forestall fraud and code stablecoin reserve management.

But arsenic MiCA enters its last implementation phase, policymakers are shifting their attraction to regulating DeFi, wherever galore questions stay unresolved, according to Vyara Savova, elder argumentation pb astatine the European Crypto Initiative (EUCI).

Speaking during Cointelegraph’s Chain Reaction X Spaces amusement connected June 4, Savova said DeFi protocols stay successful regulatory limbo.

The framework’s implementation leaves ambiguity astir DeFi protocols, arsenic “DeFi is theoretically extracurricular the scope of MiCA,” Savova said, adding:

“No 1 really knows what EU policymakers mean by DeFi.”

Savova said that starting astir mid-2026, authorities successful the bloc volition commencement interpreting however to legally specify decentralization.

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The archetypal MiCA model received important disapproval for its gaps related to decentralized protocols, arsenic it required DeFi platforms to adhere to the aforesaid licensing and Know Your Customer (KYC) requirements arsenic accepted fiscal services firms. 

However, a proviso to the bill, Recital 22, mentioned that “fully decentralized” crypto-asset work providers “should not autumn wrong the scope of this Regulation.”

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MiCA 2 is not happening: EU crypto argumentation expert

While MiCA’s last implementation went unrecorded astatine the extremity of 2024, lawmakers are inactive conducting revisions each 12 to 18 months related to imaginable gaps successful the regulation.

Yet contempt galore erstwhile calls from Christine Lagarde, president of the European Central Bank, the MiCA II model volition not beryllium moving guardant successful the region, according to Marina Markezic, enforcement manager and co-founder of EUCI:

“You person astir apt heard astir a imaginable MiCA II. It’s not happening.”

She added that ongoing discussions astir stablecoins whitethorn effect successful targeted legislative updates alternatively than a afloat sequel to MiCA.

The AML Handbook. Source: EUCI

Meanwhile, the EU has yet to rotation retired caller Anti-Money Laundering rules that volition restrict the usage of privateness coins and anonymous crypto accounts. Those provisions are scheduled to instrumentality effect successful 2027.

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