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Europe Gears Up to Regulate DeFi in 2026 as MiCA Leaves Sector in Limbo
As the EU’s sweeping MiCA framework rolls out, decentralized finance remains in regulatory gray space — but not for long.
DeFi’s Legal Status Under MiCA Still Unclear
European regulators are preparing to address decentralized finance (DeFi) directly in 2026, but the foundational challenge remains: what does “decentralization” actually mean?
The Markets in Crypto-Assets Regulation (MiCA) — the world’s first comprehensive crypto regulatory framework — came into force on December 30, 2024, aiming to protect investors, fight fraud, and strengthen stablecoin oversight. But DeFi protocols are still operating in a legislative gray zone.
Speaking on Cointelegraph’s Chain Reaction X Spaces on June 4, Vyara Savova, senior policy lead at the European Crypto Initiative (EUCI), pointed out the core issue:
“No one actually knows what EU policymakers mean by DeFi.”
Although MiCA outlines detailed licensing and compliance obligations for centralized actors, DeFi has been left largely undefined — and potentially out of scope.
Mid-2026: The Year of DeFi Regulation in the EU
Savova noted that starting mid-2026, EU authorities will begin the process of legally defining decentralization — a prerequisite for regulating DeFi in earnest. Until then, DeFi platforms operate in uncertainty.
One of the most contested elements of the original MiCA rollout was its treatment of decentralized protocols. Critics argued it imposed the same Know Your Customer (KYC) and licensing requirements on DeFi as it does on traditional financial entities — a problematic mismatch.
However, Recital 22 in MiCA offers some hope. It states that fully decentralized crypto-asset service providers “should not fall within the scope of this Regulation.” The challenge? There’s still no working definition of “fully decentralized.”
MiCA 2? Not Happening, Says EUCI
Despite prior calls — even from European Central Bank President Christine Lagarde — for a MiCA II to address these gaps, that sequel regulation appears to be off the table.
According to Marina Markezic, executive director and co-founder of EUCI:
“You have probably heard about a potential MiCA II. It’s not happening.”
Instead, any updates are expected to be narrow and targeted — particularly around stablecoins — rather than a full legislative overhaul.
MiCA continues to undergo rolling revisions every 12 to 18 months, allowing the EU to respond to emerging gaps without reopening the entire framework.
The Bottom Line
Europe’s crypto regime is evolving — and DeFi is finally in the spotlight. But until lawmakers can clearly define what counts as decentralized, protocols will remain caught between legal categories.
With 2026 shaping up to be a turning point, the EU must now strike a balance between innovation, security, and clarity.
@ Newshounds News™
Source: Cointelegraph
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XRP Has Privileged Role on XRPL, Ripple CTO Explains Key Advantages
Ripple’s chief technologist underscores XRP’s indispensable position in the XRPL ecosystem, affirming its critical role in liquidity, decentralization, and fee mechanisms.
XRP’s Core Role in the XRPL Ecosystem Reaffirmed by Ripple CTO
Ripple Chief Technology Officer David Schwartz took to X (formerly Twitter) on June 4 to clarify XRP’s foundational place within the XRP Ledger (XRPL).
Responding to community debate about XRPL’s evolving token ecosystem, Schwartz outlined why XRP remains uniquely essential despite the ledger’s growing diversity.
“The XRPL is more than just XRP. There are stablecoins, there will be tokenized real world assets, loans of all kinds of things. A DEX doesn’t work with just one asset.”
That said, Schwartz emphasized that XRP maintains a privileged role in the protocol’s architecture that no other token can replicate.
Why XRP Is Still Indispensable
Schwartz detailed several ways XRP is structurally embedded into XRPL’s functionality:
- Universal Reception: “It’s the only asset that any account can receive.”
- No Counterparty Risk: XRP doesn’t require trust lines or third-party issuers.
- Liquidity First: “Pathfinding checks for XRP liquidity first.”
- Autobridging: The system prioritizes XRP for bridging trades between other assets.
- Fee Payments: XRP is the only asset that can be used to pay XRPL transaction fees.
These design features give XRP an architectural advantage in routing liquidity, powering decentralized exchanges (DEXs), and facilitating trustless payments across the ledger.
Market Value vs. Ledger Utility
Schwartz concluded with a reflection on the difficulty of quantifying XRP’s market value as a function of XRPL’s utility:
“The question to ponder is how much value XRPL can generate and to what extent that can turn into XRP value.”
He noted the challenge in measuring how XRPL adoption directly translates into demand for XRP — but reiterated that its native, non-replicable role within the network is fundamental to any such growth.
While critics have questioned XRP’s dependency on Ripple or the need for a native token, the protocol’s technical framework continually reinforces XRP’s status as the central asset for liquidity, fees, and routing across a growing DeFi landscape.
Bottom Line
As the XRPL expands to support stablecoins, tokenized assets, and loans, XRP remains its keystone. The core functions of the ledger — from payment settlements to DEX operations — are still fundamentally tied to XRP, reinforcing its long-term strategic relevance.
@ Newshounds News™
Source: Bitcoin News
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