The EU plans to advance DeFi regulation in 2026, current MiCA framework has definition ambiguity issues

According to Cointelegraph, the European Union plans to advance decentralized finance (DeFi) regulation by 2026, but the current Markets in Crypto-Assets Regulation (MiCA) has yet to clearly define the concept of "decentralization." Vyara Savova, a policy expert at the European Crypto Initiative, pointed out on June 4 that since MiCA theoretically does not cover DeFi protocols, the field remains in a regulatory gray area.

The MiCA framework, effective at the end of 2024, aims to enhance investor protection and stablecoin regulation, but its requirement for DeFi platforms to adhere to traditional financial institution-level licensing and KYC regulations has sparked controversy. Notably, Article 22 of the regulation specifically states that "fully decentralized" service providers are not subject to regulatory constraints.

Marina Markezic, co-founder of the European Crypto Initiative, clarified that although there is a mechanism for amending regulatory loopholes, "the MiCA II framework will not advance." It was also revealed that the EU's new anti-money laundering rules, set to take effect in 2027, will restrict the use of privacy coins and anonymous crypto accounts.