The Cardano Foundation has called on European Union policymakers to address existing shortcomings in the Markets in Crypto-Assets framework, known as MiCA, rather than extend its regulatory scope to cover decentralized finance.
The Cardano Foundation has called on European Union policymakers to address existing shortcomings in the Markets in Crypto-Assets framework, known as MiCA, rather than extend its regulatory scope to cover decentralized finance. The intervention positions the Foundation as an active participant in a debate that will shape how the EU treats blockchain-based financial protocols for years to come.
What the Cardano Foundation wants the EU to fix in MiCA
MiCA is the EU’s landmark regulatory framework for crypto-assets, establishing licensing requirements, consumer protection rules, and market conduct standards for centralized issuers and service providers. The Cardano Foundation, the Switzerland-based nonprofit that stewards the Cardano protocol, has argued that the framework as written contains gaps and ambiguities that regulators should resolve before contemplating any broadening of its reach. For related coverage, see Cryptocurrency Price Predictions: Solana, Cardano, Polkadot in 2025.
The Foundation’s position is that MiCA was designed with centralized intermediaries in mind, and that extending its rules without first correcting structural flaws would impose compliance costs on actors who do not fit the framework’s assumptions. Rather than advocating for lighter oversight, the Foundation is pressing for a more technically accurate rulebook. For related coverage, see Top Crypto Gainers Today: BlockDAG, Cardano, BNB, & Ethereum Are Poised For Growth.
Cardano has drawn attention from institutional investors recently, with T. Rowe Price adding ADA to an active crypto ETF, a signal that the protocol’s governance and foundation activity are being watched by asset managers tracking regulatory exposure. How the EU treats the broader ecosystem matters to that investor calculus. For related coverage, see Hashdex to Liquidate DEFI Bitcoin ETF This Month, Selling About 225 BTC.
Why the Foundation says MiCA should not be expanded to DeFi
Decentralized finance, or DeFi, refers to financial applications built on public blockchains that operate through self-executing smart contracts rather than licensed intermediaries. Lending, trading, and yield generation can occur programmatically, with no company holding custody of user funds. Applying a licensing framework built for firms to software protocols raises fundamental questions about who bears regulatory responsibility.
The Cardano Foundation’s opposition to expanding MiCA to DeFi rests on this structural mismatch. When there is no identifiable issuer, custodian, or operator in the traditional sense, regulators attempting to apply MiCA-style rules face the problem of designating a compliance target that may not exist in recognizable form. The Foundation argues that regulators should resolve this conceptual problem before drafting new rules, not use an expansion of MiCA as the vehicle for working it out.
The broader DeFi regulatory question is not unique to the EU. The United States, the United Kingdom, and international standard-setters have all grappled with whether existing securities and financial services laws apply to permissionless protocols. The EU’s approach under MiCA will influence those conversations, making the Foundation’s intervention relevant beyond European borders.
From a Bitcoin perspective, the DeFi regulatory debate carries distinct implications. Bitcoin’s primary use case remains a decentralized, permissionless monetary network, and regulatory frameworks that treat on-chain activity as equivalent to intermediated financial services set precedents that could eventually reach Bitcoin-native applications. Hashdex’s recent decision to liquidate its DEFI Bitcoin ETF illustrates how regulatory and market pressure around the DeFi category affects products denominated in Bitcoin itself.
What the MiCA debate means for EU crypto policy going forward
The Cardano Foundation’s intervention presents EU policymakers with a clear choice: direct resources toward refining MiCA’s existing provisions, or begin drafting a new regime that attempts to reach decentralized protocols. The Foundation’s recommendation is the former, on the grounds that unresolved issues in the current text should be addressed before the framework’s scope grows.
MiCA entered into full application for most provisions in late 2024, meaning supervised entities are already operating under its requirements. Amendments or clarifications to the existing text require EU legislative process, including European Parliament and Council involvement, making any changes a multi-year undertaking. The Foundation’s call to fix MiCA first acknowledges this timeline: expanding to DeFi while foundational ambiguities remain unresolved would compound regulatory uncertainty rather than reduce it.
Investors tracking Cardano’s institutional trajectory have noted the Foundation’s willingness to engage EU institutions directly. The protocol’s futures market activity and recent milestones reflect a project that sees regulatory clarity, not regulatory avoidance, as a competitive advantage. Whether EU policymakers take up the Foundation’s specific recommendations remains to be determined through formal consultation processes.
The competing policy paths are now visible. A targeted MiCA revision would address classification gaps, stablecoin provisions, and enforcement coordination that practitioners have flagged since the framework passed. A DeFi expansion would require new definitions, new designated-entity concepts, and new enforcement mechanisms. The Foundation has staked out the narrower path, and other blockchain organizations will face pressure to clarify whether they agree.
For Bitcoin specifically, the MiCA debate reinforces a pattern visible across every major jurisdiction: regulators initially design rules for centralized intermediaries, then face pressure to extend them to decentralized infrastructure. Bitcoin’s network operates without an issuer, a foundation with lobbying capacity, or a governance token, which means it occupies a different regulatory category than most assets covered by MiCA. Watching how the EU handles the fix-versus-expand question for Cardano and DeFi more broadly will indicate how much regulatory surface area Bitcoin’s ecosystem may face in Europe over the next legislative cycle.
Additional source references: source document 1, source document 2.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
