EU Initiates Development of DeFi Regulatory Framework in Earnest

The European Union (EU) is set to establish a regulatory system for decentralized finance (DeFi) with a target of implementation next year.

According to Coincu, a cryptocurrency-focused media outlet, the EU plans to address the regulatory gap in the DeFi sector—which was not included in the MiCA framework that took effect in December 2024—by preparing a new legal framework starting from mid-2026.

Viara Savova of the European Crypto Initiative stated, "Defining the technical standards of decentralization is a key task," and explained, "This will be the effort to incorporate the scope of DeFi, which existing regulations fail to cover, into the institutional framework."

Previously, in a joint report in February, the EU signaled the start of discussions on DeFi regulation. The new policy direction is expected to have a structural impact on the wider DeFi ecosystem, including Ethereum (ETH)-based protocols, within the European market. In particular, new standards may be established for token classification and the institutionalization of yield-generating products.

Marina Markezic, co-founder and executive director of the European Crypto Initiative, emphasized, "To foster innovation, regulatory standards must align with the rapidly evolving characteristics of digital assets," adding, "This framework will serve as the foundation for the EU to secure regulatory competitiveness in the global digital asset market."

Meanwhile, it has been reported that the previously considered 'MiCA II' follow-up regulatory proposal will not be pursued.