Decentralized financial protocols in Europe may soon be subject to new regulations as the European Commission evaluates the space.
According to Markets in Crypto-Assets (MiCA), the regulatory framework governing digital assets in the region, the European Commission is required to prepare a report by December 30, 2024, assessing the decentralized financial market and the feasibility of specific regulations for the sector.
"In preparation for this report, we have undertaken a number of activities. For example, we are conducting a study on embedded supervision.
The aim of the report is to examine how decentralized systems should be regulated, especially those without a clear issuer or service provider. "An important aspect of this assessment will be to examine the regulation of lending and borrowing of crypto assets, a core activity in the DeFi space," - Maxim Galash, CEO of CoinChange Financials, explained in the analysis.
DeFi represents a shift from traditional, centralized financial systems to peer-to-peer financing enabled by decentralized blockchain-based technologies. While traditional financial regulations often depend on the regulation of central entities such as banks or financial service providers, decentralized systems operate without such intermediaries.
