The Association for Financial Markets in Europe (AFME) urged regulators not to exclude DeFi from the regulatory framework of MiCA. This is stated in the corresponding document.
“We believe that decentralised finance and related activities should be placed within a properly defined regulatory perimeter to manage risks to market integrity, financial stability and end users, while promoting financial and technological innovation,” AFME said.
On 20 April, the EU Parliament voted in favour of the MiCA regulatory package. The document introduces strict rules aimed at protecting investors and consumers, including the disclosure of information and compliance with AML/CFT-standards, and tightens requirements for stablecoins, which must be backed by a separate reserve asset.
However the law does not yet cover DeFi services.
“This exception could create unintended risks to financial stability and potential side effects. While the current intersection of decentralised and traditional finance is not yet significant, it should be actively monitored,” the document states.
According to the report, AFME regards the DeFi segment as an important innovation in the financial system. The association notes that it advocates a risk-based approach to regulating the sector and cooperation between supervisory authorities.
Earlier in March, the Netherlands Authority for the Financial Markets said it would take a hard line on enforcing the EU’s new cryptocurrency rules.
Earlier, Binance’s European division vice president Martin Brunko said that MiCA will benefit and simplify work for small firms involved with digital assets.