Have you ever watched a promising technology get tangled in red tape just as it starts to prove itself? That is exactly the unease many builders feel when European policymakers begin floating the idea of fresh layers of rules for decentralized activities that already sit outside the current framework. The Cardano Foundation has stepped forward with a clear message: Europe does not need an entirely new set of regulations for decentralized finance or staking. Instead, it should sharpen the Markets in Crypto-Assets Regulation that already exists, give clearer guidance, and apply it more consistently. In my view, this approach makes practical sense if the goal is genuine legal certainty rather than endless compliance theater.
Why Focusing on Existing MiCA Makes More Sense Than New Rules
European institutions are reviewing how MiCA has been rolling out and asking whether activities currently left outside its scope deserve extra oversight. The Commission opened a consultation earlier this year to collect views from businesses, banks, regulators and other participants. The Cardano Foundation used that opportunity to argue that creating separate regimes for blockchain-native activities risks adding cost and complexity without tackling risks that current laws already cover. Perhaps the most interesting aspect of their position is the insistence on looking at what people actually do, how much control they exercise, and what risks really arise, rather than labeling something “decentralized” and automatically inventing new paperwork.
Public blockchains let users interact with applications, send transactions and help secure the network without always relying on a middleman who holds customer funds. According to the Foundation’s thinking, simply writing or running software that lets people do those things should not automatically turn someone into a regulated financial service provider. I’ve found that this distinction between infrastructure and intermediated services is often where regulatory debates become messy. When an identifiable company takes custody, makes discretionary decisions, or runs a commercial product on top of the chain, ordinary financial rules can still apply. When users simply participate directly, the picture changes.
The Crucial Difference Between Direct Participation and Intermediated Services
Regulatory requirements should track real-world control and risk, not the technology itself. The Foundation stressed that providing blockchain infrastructure or open software does not equal offering a financial service. Users on a public chain can execute transactions and join network operations without handing assets to an intermediary. Before layering on financial-services obligations, regulators should check whether an identifiable person or entity actually controls the relevant assets or the transactions. That simple test avoids treating pure technical participation as if it were a bank or broker.
Staking illustrates the point especially clearly. On networks that use proof-of-stake, holders can often delegate their stake to support consensus without transferring custody or locking tokens in a way that removes their control. This kind of direct participation strengthens the security and decentralization of the network. By contrast, commercial staking services run by companies may involve custody arrangements or active management of customer assets. Those commercial offerings raise different questions and can reasonably fall under existing rules. Keeping the two categories separate prevents over-regulation of the core security mechanism that keeps many modern chains running.
Participation of this kind supports the security and decentralization of proof-of-stake networks. Commercial staking services that take custody or exercise discretion create a different risk profile and should be assessed accordingly.
European lawmakers have not entirely shared this view. The Parliament has called for a review that would examine decentralized finance, staking, crypto lending and non-fungible tokens under the MiCA umbrella, even though that call has not yet produced immediate legal changes. The tension is real: some want broader coverage now, while others prefer to see how the existing text performs before adding more.
Clarifying Hybrid Tokens and the Boundary With Existing Financial Law
Another major theme in the consultation concerns how MiCA sits alongside the Markets in Financial Instruments Directive, usually called MiFID II. Some crypto assets fall under MiCA; tokens that qualify as financial instruments stay under the older securities and markets rules. The difficulty arises when a token mixes several functions or when its characteristics evolve over time. The Foundation supports keeping the current split between the two frameworks but wants clearer guidance so that hybrid tokens and assets whose legal status is open to different national readings do not create constant uncertainty.
Classification should rest on the asset’s actual characteristics and the legal rights it confers, regardless of whether those rights are recorded on a blockchain. That technology-neutral principle is sensible. A token that behaves like a share or a bond should be treated as such; a pure utility or payment token should not suddenly become a security merely because it lives on a distributed ledger. Recent discussions among market participants have reinforced the same idea: financial instruments ought to be regulated according to their economic substance, not the technology used to issue, hold or transfer them.
- Examine the rights the token actually grants holders
- Look at how the token functions in practice rather than its marketing label
- Avoid automatic reclassification simply because blockchain is involved
- Provide cross-border consistency so the same token is not a security in one member state and outside the regime in another
Inconsistent national interpretations remain a practical headache. Even after MiCA created common EU-wide rules, differences in how supervisors read the text and how they apply it continue to generate uncertainty for businesses. The Foundation recommended more uniform interpretations and clearer rules on ownership, transfers and third-party rights when tokenized assets move across borders. It also suggested harmonized conflict-of-laws provisions that would decide which country’s law governs a particular transaction without forcing every member state to rewrite its property law in identical language.
Stablecoins, Multi-Issuer Arrangements and Payment Overlaps
Stablecoins raised a separate set of concerns, especially structures that involve multiple issuers or operations spanning several jurisdictions. The Foundation asked for clearer treatment under MiCA and for attention to possible overlaps with European payment-services legislation. When a stablecoin arrangement looks and behaves like electronic money or a payment instrument, existing payment rules may already cover the relevant risks; inventing a parallel regime can create duplication rather than better protection.
Central banks have floated the idea of expanding restrictions on stablecoin remuneration so that indirect returns generated through lending, borrowing or staking arrangements would also be limited. That proposal aims to stop stablecoins from competing too directly with traditional deposits or money-market products. Whether the restriction is calibrated correctly is open to debate. Too tight a rule might push activity outside the regulated perimeter; too loose a rule might allow unmonitored yield products to grow under the stablecoin label. Clearer guidance on multi-issuer models would at least reduce the current guesswork for projects trying to operate lawfully across borders.
| Issue | Foundation Recommendation | Potential Benefit |
| Hybrid tokens | Clarify classification based on actual rights and function | Reduces national divergence |
| Multi-issuer stablecoins | Define treatment under MiCA and payment rules | Avoids double regulation |
| Direct staking | Keep separate from commercial custody services | Protects network security mechanisms |
| NFT collections | Judge each token on its own characteristics | Preserves genuine uniqueness exemptions |
Keeping Genuine NFT Exemptions Intact
Non-fungible tokens formed another focus of the consultation, particularly whether tokens that belong to large collections should still qualify for MiCA exemptions. The Foundation backed retaining the exclusion for assets that are genuinely unique and non-fungible. Membership in a collection should not automatically decide whether a token is legally fungible. Classification ought to depend on the individual asset’s characteristics and whether it is truly interchangeable with others.
Subsequent activities involving an NFT—fractional ownership arrangements or integration into financial applications by independent third parties—should not automatically reclassify the original asset. That stance prevents a cascade in which every creative or collectible token suddenly falls under financial-services rules merely because someone later builds a product around it. The Foundation also opposed creating a separate regulatory regime just for NFT-related services. Relevant activities can be assessed under laws that already exist. A similar logic was offered for prediction markets, perpetual futures and cryptocurrency lending: let the economic and legal characteristics determine which existing rules apply rather than inventing bespoke crypto-only categories for every new use case.
Environmental disclosure requirements were flagged as another area ready for improvement. Reporting rules should take into account the real differences between blockchain architectures instead of applying a one-size-fits-all template. Networks that rely on different consensus methods or that have optimized energy use over time will produce different footprints; the disclosure framework should reflect those distinctions so that the data remains meaningful.
Inconsistent Supervision and the Burden on Smaller Projects
Even with a single EU regulation on the books, differences in national interpretation and day-to-day supervisory practice continue to create friction. The Foundation warned that complex compliance obligations can place smaller cryptocurrency businesses at a disadvantage compared with established firms that have larger compliance teams and bigger budgets. That observation rings true. A large institution can absorb the cost of navigating slightly different readings of the same text in several member states; a lean team building open-source tools or a community-driven protocol often cannot.
- Harmonize how supervisors interpret core MiCA provisions
- Clarify ownership and transfer rules for tokenized assets that cross borders
- Support legitimate reverse-solicitation arrangements for non-EU firms
- Consider equivalence or comparable foreign frameworks where appropriate
- Develop common reporting standards so firms are not answering the same question five different ways
Access for companies based outside the European Union was also addressed. The Foundation supported legitimate reverse-solicitation arrangements and suggested that regulators look at comparable foreign frameworks when assessing whether additional local requirements are needed. Supervisory priorities published by European authorities have already highlighted the need to coordinate national regulators, monitor reverse solicitation, and build shared reporting standards for crypto-asset service providers. Aligning those practical tools with the Foundation’s recommendations would reduce the current patchwork without requiring a brand-new legislative package.
I’ve noticed that regulatory debates often swing between two extremes: either everything novel must be tightly licensed immediately, or innovation should face almost no constraints. The middle path the Foundation sketches—improve the text that is already in force, give clearer guidance on edge cases, and apply the rules more evenly—avoids both traps. It preserves the safeguards MiCA was designed to create while lowering the chance that smaller or more decentralized projects simply relocate or shut down because compliance costs became unpredictable.
What the Ongoing Review Should Prioritize
The Commission is expected to review the consultation responses before deciding whether legislative changes are actually necessary. In the meantime, several practical improvements could be pursued through guidance, technical standards and supervisory coordination. Clearer examples of hybrid-token analysis, consistent treatment of multi-issuer stablecoin structures, and explicit recognition that direct network participation differs from custodial services would already reduce a large share of the current uncertainty.
Environmental reporting that respects architectural differences, conflict-of-laws rules that settle which national law applies to cross-border token transfers, and lighter but still effective compliance pathways for smaller entities would further help. None of these steps requires inventing an entirely new regulatory silo for decentralized finance or for staking. They simply make the existing MiCA framework more predictable and technology-neutral.
Europe has repeatedly stated its ambition to become a global leader in tokenized capital markets. Reaching that goal depends on legal certainty and on rules that regulate instruments according to their economic reality rather than the ledger they happen to use. Over-regulating pure technical participation or forcing every NFT collection into a financial-services box would undermine that ambition. Refining MiCA so that it distinguishes infrastructure from intermediated services, clarifies hybrid cases, and is applied evenly across member states would do the opposite: it would give builders a clearer runway while still protecting users and market integrity.
Whether policymakers ultimately follow that path remains an open question. The consultation has at least put a detailed alternative on the table—one that treats the current regulation as a living instrument capable of improvement rather than a finished product that must be supplemented by ever more specialized rules. For projects that have invested years in open networks and for the smaller teams that keep those networks running, the difference between those two approaches is not academic. It will shape whether Europe remains a place where decentralized technology can grow under sensible oversight or becomes a jurisdiction where only the largest, best-resourced players can afford to stay.
The conversation is far from over. Supervisors will continue to test how MiCA works in practice, market participants will keep submitting real-world examples of hybrid tokens and multi-jurisdictional stablecoins, and the Commission will eventually decide how far to go. In the meantime, the distinction between direct blockchain participation and commercial intermediated services offers a useful compass. Apply existing rules where control and risk are present; clarify and harmonize where the text is ambiguous; and resist the temptation to create new regimes for activities whose risks are already addressed. That measured course is, in the end, the one most likely to deliver both protection and the legal certainty Europe says it wants.
