Marina Markezic, executive director of the European Crypto Initiative, anticipates that forthcoming regulations for decentralized finance (DeFi) protocols in Europe could pose significant challenges for crypto-native projects while incentivizing traditional financial institutions to participate. Markezic shared her insights during an interview with Cointelegraph, highlighting the European Commission’s upcoming DeFi report slated for release on Dec. 30, 2024, under the Markets in Crypto-Assets (MiCA) framework. This report will explore the feasibility of tailored regulations for the DeFi ecosystem.
Markezic suggests that the regulatory landscape could encourage traditional financial players to enter the crypto space, potentially leading to the issuance of stablecoins by banks. However, she cautions that compliance and licensing may become more challenging for crypto-native projects under the new framework.
The EU’s report aims to delve into the regulation of decentralized systems, particularly those lacking clear issuers or service providers, such as decentralized exchanges. One key outcome could be the establishment of definitions for decentralization from a regulatory standpoint. Markezic proposes a nuanced view of DeFi, emphasizing a spectrum ranging from fully decentralized systems to those with varying degrees of control and management.
Legal experts advocate for clear standards rather than rigid rules in DeFi regulation. Sascha Drobnjak, former head of legal and compliance at the Elusiv protocol, emphasizes the importance of aligning on the definition of DeFi and implementing adaptable regulations that can accommodate future technological innovations.
Despite regulatory challenges, the DeFi market in Europe is poised for expansion. Operating primarily on public blockchains like Ethereum, DeFi offers financial services without traditional intermediaries. Statista projects significant revenue growth for the DeFi sector, reaching $6.69 billion in 2024 and expected to continue growing with a compound annual growth rate of 9.67% through 2028.
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