Cardano MiCA response puts control at the centre of regulation
The Cardano MiCA response asks European policymakers to focus on what a business actually does, rather than treating the use of blockchain as sufficient reason to create another regulatory category.
In an October 21 publication explaining its submission, the Cardano Foundation argued for clearer boundaries, proportionate requirements and consistent interpretation across the European Union. The article was authored by Benjamin Buergi, its senior legal counsel.
Its guiding position is:
“Regulation should follow the substance of an activity, the functions performed, and the risks created”
The Foundation submitted its response on September 30. Its publication this week brings that position into wider public discussion as Europe considers MiCA’s practical operation and possible improvements.
The central question is consequential for developers and users alike: when does participation in a blockchain become the provision of a regulated service?
Why the European Commission is reviewing MiCA
The Commission opened its targeted consultation on May 20, 2026, with a deadline of September 30. The official consultation page now marks it as closed.
The exercise is intended to assess whether MiCA remains suitable following its initial implementation and subsequent market developments. Responses will inform reports required under Articles 140 and 142. The Commission says those reports may be accompanied by a legislative proposal where warranted.
That process leaves several stages between an industry submission and a change in law. A response can identify problems and recommend solutions, but it does not establish that policymakers have accepted either.
For businesses planning products, this distinction matters. Current obligations remain the starting point while the review considers what might change.
DeFi’s label does not settle its legal treatment
The Foundation’s detailed submission argues that DeFi includes materially different arrangements. Some have identifiable operators exercising substantial control; others rely on autonomous protocols without an intermediary able to fulfil conventional regulatory obligations.
It proposes examining factors such as control over customer assets, transactions, access and key functionality. Under that approach, smart contracts would not automatically exempt a business performing a regulated function.
Existing MiCA language already recognises a relevant distinction. Recital 22 says services provided in a fully decentralised manner without an intermediary should fall outside the regulation’s scope. It also addresses services controlled directly or indirectly by persons or undertakings, including where parts operate in a decentralised manner.
The practical challenge is applying that distinction consistently. Calling an application “decentralised” does not explain who can change its rules or intervene in its operation.
Staking models create different responsibilities
Staking is a particularly important example in the response.
The Foundation points to Cardano delegation, where ADA holders can participate without transferring control of their assets to a stake-pool operator or locking them. It contrasts that with intermediated arrangements in which a provider takes custody, exercises discretion or assumes obligations toward customers.
Those differences affect the relationship between the user and the service:
Arrangement | Question that matters |
Direct participation | Does the holder retain control of the assets? |
Non-custodial delegation | What authority does the operator receive? |
Custodial staking | Who holds the assets or signing keys? |
Managed staking product | Who chooses how assets are deployed? |
The table describes an analytical distinction, rather than assigning a final legal classification to every product.
For users, the word “staking” alone provides too little information. The terms governing custody, withdrawals, discretion and losses deserve closer examination.
The Commission is also examining intermediary risks
The consultation document asks stakeholders about operational risks, market abuse, investor protection and other concerns associated with DeFi.
It explores possible indicators of control, including administrative keys and concentrated governance. It also considers whether regulated service providers connecting customers to DeFi should face additional responsibilities.
On staking, the document explains that services involving custody can already engage MiCA’s custody requirements.
These questions show why the debate is more detailed than choosing between regulation and an unrestricted market. Policymakers are considering where obligations should attach and which actors can realistically carry them out.
For customers assessing a provider today, verifying the entity and its permissions remains useful. Bitnxt’s guide to checking an OTC desk explains practical due-diligence questions around service providers.
Asset classification remains another fault line
The Foundation also supports preserving the boundary between MiCA and existing financial-services legislation, including MiFID II. Its position is that an asset’s substantive characteristics should determine the applicable framework, with clearer treatment for hybrid instruments and inconsistent national interpretations.
The Commission’s questionnaire similarly notes that financial instruments governed by other sectoral legislation sit outside MiCA’s scope.
A blockchain record therefore does not answer every legal question about the asset recorded on it. Ownership rights, contractual claims and the surrounding arrangement still matter.
Bitnxt’s explanation of tokenized stocks and on-chain equity markets examines why similar-looking tokens can provide different rights.
Bitnxt’s view: clearer boundaries need workable tests
Bitnxt’s assessment: The strongest part of the Foundation’s argument is its focus on identifiable responsibility. Rules are easier to apply when they specify who controls assets, who makes decisions and who owes obligations to a customer.
The difficult part is translating that principle into predictable tests. Control can be distributed across operators, governance participants and software permissions. Assessments need enough detail to prevent easy avoidance while remaining understandable to legitimate builders.
The next development to watch is the Commission’s published assessment and any proposed amendments. Until then, this submission is an important contribution to a continuing policy process.
You might also like: Why the ECB resists changes to MiCA’s stablecoin framework.
