Cardano Foundation Urges EU Against Expanding MiCA to Non-Custodial Staking and DeFi Protocols

The Cardano Foundation formally submitted recommendations to the European Commission advising against expanding the scope of the Markets in Crypto-Assets Regulation (MiCA) to encompass native staking and decentralized finance (DeFi). The submission comes as European regulators, led by the European Securities and Markets Authority (ESMA), evaluate proposals for a new regulated service category covering entities that provide access to DeFi protocols along with stricter oversight on staking and lending.
In its feedback, the Foundation argued that regulatory frameworks should evaluate actual financial risk and the degree of custodial control an operator holds over user assets, rather than applying blanket rules across underlying technologies. Specifically, the submission emphasized that non-custodial liquid staking—where delegators retain unilateral ownership of their assets without lockup periods or intermediaries—presents fundamentally different risk profiles compared to centralized, custodial staking-as-a-service providers. The Foundation warned that misaligned rules and overlapping obligations with existing legacy financial legislation risk creating severe regulatory uncertainty for European Web3 businesses ahead of the Commission's formal MiCA review report.