EU to Regulate DeFi by Mid-2026: The End of MiCA’s Ambiguity
While the EU’s first comprehensive regulatory framework, Markets in Crypto‑Assets Regulation (MiCA), officially came into effect on 30 December 2024, the DeFi sector remains in a “shadow zone” due to the lack of a clear definition of “decentralization”. Vyara Savova, Senior Policy Lead at EUCI, shared on Chain Reaction X Spaces that no one really knows how European regulators will define DeFi
The Fight Against Legal Ambiguity
MiCA requires DeFi platforms to adhere to the same rigorous standards as traditional financial institutions from licensing to KYC – although “fully decentralized” protocols under Section 22 are actually exempt
. However, defining what constitutes a fully decentralized protocol remains a difficult issue.
Marina Markezic, co-founder of EUCI, confirms there are no plans for a “MiCA II” with the current focus on stablecoins rather than building a new MiCA framework
. In addition, new AML regulations on privacy coins expected to come into effect in 2027 will also force DeFi to comply more strictly
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Why mid-2026 is key
The EU has been working on DeFi legislation since mid-2026 when the MiCA framework ends its transition period
en.wikipedia.org
Determining the level of “decentralization” will shape how DeFi protocols are allowed to operate legally in the EU.
The global landscape of DeFi is rapidly advancing with a market expected to reach $231 billion by 2030, putting pressure on the EU to build appropriate regulation sooner rather than later.
Impact on DeFi and its stakeholders
DeFi platforms need to be prepared to comply with the same level of compliance as traditional banks or exchanges if they are not considered “fully decentralized”.
For developers, a clear definition of centralization/decentralization is essential to maintaining the opportunity to operate in the EU.
For investors, a clear regulatory framework provides peace of mind but can also mean higher compliance costs, especially if code/smart contracts disclose personal information.
In short, the EU is moving quickly from “MiCA ambiguity” to laying the foundations for clear DeFi legislation by mid-2026. This is an important point to consider when weighing the risks and opportunities for DeFi projects looking to establish themselves in the European market.