European crypto regulation in 2026: DeFi, not MiCA II at the forefront
European lawmakers have not yet defined "decentralization" as they prepare to focus on decentralized finance (DeFi) regulations by 2026. The Markets in Crypto-Assets Regulation (MiCA) took effect on December 30, 2024, aiming to enhance investor protection and prevent fraud, but leaves DeFi protocols in regulatory uncertainty. Vyara Savova from the European Crypto Initiative noted that DeFi remains ambiguous under MiCA, which does not clearly encompass decentralized protocols. Critics argue that MiCA's requirements for DeFi platforms mirror those of traditional financial services. A provision suggests that "fully decentralized" services may be exempt from MiCA. MiCA II will not proceed, with future updates likely focusing on specific issues rather than a comprehensive overhaul. New Anti-Money Laundering rules targeting privacy coins and anonymous accounts are set to be implemented in 2027.
