ZURICH — The Cardano Foundation has formally urged the European Union against implementing new, standalone regulations for decentralized finance and staking, arguing that existing financial laws are sufficient provided oversight is based on function and risk rather than underlying technology.
The foundation detailed this position in a 19-page submission to the European Commission on Sept. 30. Central to its argument: "Regulation should follow the substance of an activity, the functions performed, and the risks created, not the technology through which it is conducted."
The foundation draws a distinction between direct participation in decentralized networks and financial services provided by intermediaries. Services involving custody or control of users' assets should face different regulatory scrutiny than non-custodial participation.
Cardano's native ADA delegation exemplifies the foundation's point. Users delegate ADA to help secure the network without surrendering custody or locking tokens. This non-custodial model, the foundation argues, should be treated differently from staking services operated by centralized intermediaries where users transfer asset control.
The submission also flags potential conflicts between the EU's Markets in Crypto Assets Regulation (MiCA) and pre-existing financial laws. Overlapping requirements and inconsistent interpretations across member states could create operational uncertainty for crypto businesses.
The push arrives as EU regulators expand crypto oversight. In September, the European Securities and Markets Authority (ESMA) issued recommendations for additional safeguards around staking, lending, and borrowing activities, and suggested creating a new regulated service category for firms providing DeFi protocol access.
The foundation's argument extends to the U.S. On Oct. 20, it joined five other blockchain organizations in a letter to the Securities and Exchange Commission urging formal recognition of digital commodities as non-securities, an attempt to influence the SEC's proposed crypto framework.
Across both jurisdictions, the foundation's core message remains consistent: current regulatory frameworks applied functionally and based on risk profiles offer a more appropriate path for governing digital asset activities than creating technology-specific regulations.
