The Cardano Foundation, the non-profit organization behind the Cardano blockchain, is urging European regulators to keep the EU's Markets in Crypto-Assets Regulation (MiCA) narrowly scoped, pushing back against the overly broad classification of all decentralized crypto-related activities as separately regulated services.

In its response to the European Commission's MiCA review, the Foundation argued that more regulation would not automatically make Europe's crypto market safer or more competitive. The Foundation's consultation response is available via the Cardano Foundation's blog.

MiCA is the EU's overarching regulatory framework for crypto-asset markets, covering areas from stablecoin issuance to crypto-asset service providers. It was introduced to give the bloc a single, harmonized rulebook in place of divergent national regimes, and its core obligations have applied across member states since the end of 2024. The Commission's review is examining how the framework should apply to newer, protocol-level activities, including decentralized finance (DeFi), staking, and crypto lending — a question that will help determine how such activities are supervised across the bloc.

Regulation Based on Function, Control and Risk

The Foundation's submission was made to the Commission on September 30, 2026, and addressed topics pertinent to public and permissionless blockchains. The core of its position is that regulation should focus on what an activity is, who controls it, and what risks it presents — the economic function of an activity rather than the blockchain technology it runs on.

Under that reasoning, DeFi, staking, lending, and other blockchain-based activities should not be subjected to new rules simply because they operate on decentralized infrastructure. The Foundation recommended that regulators instead concentrate on named entities that carry out regulated financial activities or exercise meaningful control over customer transactions and assets.

Drawing a Line Between Staking and Custodial Services

Staking was among the clearest illustrations of this principle in Cardano's response. A token holder can delegate their stake so that it contributes to network consensus without surrendering ownership of the tokens or placing them with an intermediary. Staking is also a foundational mechanism of proof-of-stake networks such as Cardano, where it secures the ledger and distributes rewards to participants. The Foundation stressed that this kind of direct protocol interaction calls for a different regulatory approach than systems characterized by concentrated financial ownership or corporate decision-making power.

It further stated that simple technical access to a decentralized network, general-purpose blockchain infrastructure, and autonomous software are not financial services in themselves.

Clearer MiCA Boundaries, Not More Categories

The Foundation also opposed removing the distinction between MiCA and other financial regulations, including MiFID II, the EU's long-standing framework for investment services and financial instruments. In its view, the classification of a crypto asset as a financial instrument should rest on its actual nature rather than its location on a crypto network.

At the same time, the submission acknowledged a lack of clarity around hybrid tokens and assets whose characteristics evolve over time. It also cautioned that differing national interpretations across EU member states could undermine MiCA's objective of creating a single, concerted crypto market, and called for greater uniformity in how the rules are applied across the bloc.

Among its specific requests, the Foundation sought less overlap between MiCA and payment rules, greater clarity for multi-issuer stablecoins, and more practical sustainability disclosure that takes into account differences between blockchain designs.

Cardano additionally voiced opposition to the automatic classification of NFTs, crypto lending, perpetual futures, and prediction markets under new MiCA-specific categories.

With the consultation response now on the table, the next milestone is the Commission's own assessment, whose findings will indicate how the EU intends to treat DeFi, staking, and lending under the framework going forward.

The submission underscores the Foundation's broader position that blockchain activity should be regulated according to its economic function, control, and risk — not simply because it is built on blockchain technology.

Source: Crypto Ninjas