Coinbase’s EU policy head warns that new MiCA‑related rules could push DeFi activity toward unregulated services, fragment liquidity and worsen pricing for European users.
Coinbase’s head of EU policy, Roeland Van der Stappen, told Cointelegraph that the European Union’s move to tighten oversight of decentralized finance (DeFi) under the Markets in Crypto‑Assets Regulation (MiCA) could unintentionally steer users toward services with weaker safeguards. He said regulated crypto‑asset service providers (CASPs) may limit or drop DeFi offerings, creating “walled gardens” and fragmenting liquidity across smaller pools.
In its September response to the European Commission’s MiCA consultation, the European Securities and Markets Authority (ESMA) recommended creating a distinct regulatory category for firms that give customers access to DeFi protocols. The proposal aims to bring DeFi services under the same investor‑protection framework as other crypto‑asset activities.
The European Banking Authority (EBA) also weighed in, urging the Commission to study new rules for crypto lending and borrowing. Among the options it listed was the use of suitability tests to assess whether a DeFi service is appropriate for a particular customer. Van der Stappen cautioned that applying such tests uniformly could treat low‑risk stablecoin swaps the same as high‑risk leveraged lending, despite their differing risk profiles.
If regulated platforms curtail DeFi access, the EU could see a split in liquidity that leads to poorer trade execution and higher slippage for users. Van der Stappen warned that “a proportionate approach would be to allow CASPs to continue offering that access with safeguards matched to the activity.” He added that users might gravitate toward non‑EU providers that operate with fewer protections.
The European Commission is expected to publish its final MiCA rules later this year. Stakeholders will be watching for how the final text addresses DeFi‑specific provisions, the scope of suitability testing, and whether exemptions for low‑risk services are included. Market participants should also monitor any follow‑up guidance from ESMA and the EBA, as well as emerging data on DeFi activity trends across the EU.
Coinbase fears that stricter rules could push users toward platforms with fewer investor protections, fragment liquidity and lead to worse trade prices.
Both the European Securities and Markets Authority and the European Banking Authority have issued recommendations on how DeFi services could be regulated under MiCA.
The European Commission is slated to release the final MiCA framework later in 2026.
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