- Decentralized Finance might be subjected to the regulatory authority in Europe.
- This comes out as there have been concerns about crypto investments and customers.
- The International Association for Trusted Blockchain Applications (INTABA) has also raised concerns in response to the MiCA publication.
Following the adoption of the digital finance package by the European Commission on 24th September, MiCA (Markets in Crypto-Assets) regulations have been posed to strengthen the investments and customer interests.
Confirming the news, XReg Consulting, an industry regulatory advisor, announced that decentralized finance in Europe might be subjected to regulatory authorities.
The regulations demand that a crypto issuer must be added as a legal entity to carry out the crypto services in Europe. This is being considered as a huge challenge for the DeFi projects because they are “mostly unidentifiable,” says XReg.
“The obligation that crypto-asset issuers must be incorporated in the form of a legal entity could pose significant challenges for DeFi projects where issuance is decentralised and there is no identifiable issuer. So, while MiCA may, generally, promote consumer and investor protection, market integrity and financial stability, some innovative areas, such as DeFi, may face significant and irreconcilable regulatory challenges and possible existential questions, at least in Europe,” read the report by XReg.
Although XReg has highlighted the concerns, it is not alone. Even, The International Association for Trusted Blockchain Applications (INATBA) has raised concerns by stating that under the proposed regulation, the early staged markets like DeFi might become inaccessible to European citizens.
However, it appears that the regulations might not be applied immediately. But, despite the delay, it has been advised to the issuers to start preparing themselves with the listed rules as it might save them hassles in the long run.
Although MiCA will not apply immediately, crypto-asset issuers and service providers should start becoming familiar with its requirements and to consider the potential implications of this comprehensive regime so as to plan for the future.
How long do you think will it take for the regulatory authorities to apply this in full mode? Will it pose a danger for the DeFi projects in Europe? If yes, then what do you think can prove as a solution?
Let me know your views in the comments! Until then, keep reading:)