Stani Kulechov Criticizes EU Regulators on Stablecoin and DeFi Policies

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“Disappointed by the European Central Bank’s (ECB) and European Banking Authority’s (EBA) responses to the MiCA consultation. They are not only advocating for a prohibition on paying yield on stablecoins, but also for restrictions on CASPs providing access to DeFi, including protocols offering yield on non-MiCA-authorized stablecoins, without providing a clear framework for how access to DeFi should work in practice. They also suggest that CASPs offering access to DeFi should restrict it to certain groups of users through so-called 'suitability tests,' alongside a potential certification regime for DeFi lending protocols. It is unclear how these requirements would work in practice. If regulators determine which protocols are deemed suitable for European users, the result risks looking very different from the open DeFi that exists today. Instead, we could end up with more walled gardens that undermine the liquidity and network effects of open financial networks, ultimately limiting Europeans’ ability to access new ways to grow and preserve wealth. These proposals are presented as measures to 'protect consumers.' But excessive restrictions can instead create more friction for innovation and slow the development of open, transparent, and auditable financial infrastructure that can benefit consumers. The reality is that onchain finance, including stablecoins, DeFi, and tokenized securities, has the potential to reshape financial infrastructure by reducing friction, increasing transparency, and expanding access to financial opportunities. European consumers and businesses stand to benefit significantly from this transformation, particularly if the companies building this infrastructure can continue to build and compete from within Europe. Meanwhile, U.S. regulators, including the SEC and CFTC, have increasingly taken a more pragmatic approach toward enabling onchain financial innovation. European regulators should put users and their interests at the center of the framework. Banks and other incumbents should be able to adapt their businesses to serve users in an increasingly onchain economy, rather than relying on artificial restrictions that risk increasing costs and reducing access for Europeans as the rest of the world moves onchain. DeFi will win.”

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