Cardano Foundation Urges EU Caution on DeFi Regulation

The Cardano Foundation has formally requested that the European Union avoid creating specific norms for decentralized finance and staking services. The organization argues that existing financial laws should already cover these activities based on their actual risks.

The document submitted to the European Commission highlights that regulation must consider the substance of the activity and the functions performed. The foundation asserts that the underlying technology should not be the primary criterion for establishing new legal obligations.

There is concern regarding the overlap of standards and the lack of clarity among member states. The entity warns that inconsistent rules could create legal uncertainty for companies operating in the digital asset sector within the European bloc.

The foundation distinguishes direct participation in decentralized networks from services provided by intermediaries. According to the text, the act of delegating tokens for network security without losing custody should not be treated the same way as centralized staking services.

The debate occurs as European regulators evaluate expanding oversight of lending and DeFi protocols. The European Securities and Markets Authority recently suggested additional safeguards for these operations.