An EU crypto policy expert said that Europe plans to regulate DeFi in 2026, but lawmakers still grapple with defining decentralization under MiCA.
Even as regulators prepare for decentralized finance (DeFi) to become a significant focus of crypto legislation in 2026, European lawmakers have failed to define “decentralization.”
On December 30, 2024, the Markets in Crypto-Assets Regulation (MiCA), the first all-encompassing regulatory framework for the crypto industry, came into force.
Its objectives include addressing stablecoin reserve management, preventing fraud, and improving investment safety.
According to Vyara Savova, senior policy lead at the European Crypto Initiative (EUCI), legislators focus on regulating DeFi as MiCA moves into its final implementation phase, where many issues remain unanswered.
Savova stated that DeFi technologies are still in regulatory limbo during a June 4 appearance on Cointelegraph’s Chain Reaction X Spaces event.
DeFi protocols are unclear in the framework’s implementation since “DeFi is theoretically outside the scope of MiCA,” according to Savova.
“No one actually knows what EU policymakers mean by DeFi.”
According to Savova, the bloc’s authorities would begin evaluating the legislative definition of decentralization in the middle of 2026.
The original MiCA framework, which required DeFi platforms to comply with the same licensing and Know Your Customer (KYC) standards as traditional financial services organizations, was heavily criticized for its shortcomings in decentralized protocols.
Nonetheless, fully decentralized crypto-asset service providers “should not fall within the scope of this Regulation,” according to a clause in the draft known as Recital 22.
MiCA 2 Won’t Happen: Europe Expert On Crypto Policy
Even though MiCA’s complete implementation took effect at the end of 2024, lawmakers continue to review the bill every 12 to 18 months to address potential flaws.
However, Marina Markezic, executive director and co-founder of EUCI, has stated that the MiCA II framework will not proceed despite numerous prior appeals from Christine Lagarde, head of the European Central Bank:
“You have probably heard about a potential MiCA II. It’s not happening.”
She said that rather than a whole MiCA sequel, continued conversations regarding stablecoins might lead to specific legal revisions.
The EU has not yet implemented new anti-money laundering regulations that limit the use of private coins and anonymous cryptocurrency accounts. In 2027, such clauses are expected to go into force.
