Cardano Foundation Urges Targeted Changes to Europe’s MiCA Crypto Rules

MiCA’s central question: what activity creates the risk?

The Cardano Foundation’s message to the European Commission is that the EU’s Markets in Crypto-Assets framework, known as MiCA, should respond to what a crypto activity does and the risks it creates. Rules shouldn’t attach simply because a service or asset uses blockchain technology. In its recent response, the foundation opposed standalone requirements for decentralized finance, staking and other protocol-level activity, arguing that a broader rulebook could add complexity without giving authorities better oversight.

That argument turns on a distinction familiar from other areas of financial policy: similar technology doesn’t always mean similar services. A system that lets people interact directly with a blockchain may raise different questions from a company that holds customer assets, chooses how they’re managed or presents itself as an intermediary. Treating both in the same way could make compliance harder to interpret while leaving the underlying risks less clearly defined.

Here’s the thing: a technology-based rule can be easy to describe, but it may be a poor guide to who does what. MiCA’s practical reach depends on whether its requirements can distinguish activities and responsibilities with enough precision to be useful.

Different staking models need different treatment

Cardano holders can delegate ADA to help secure the network while keeping custody of their tokens and avoiding lockups. The foundation said this direct participation differs from a staking service that holds or manages customers’ assets, and argued the two models shouldn’t face identical requirements. The distinction is about the arrangement around staking, not just the fact that rewards or network participation are involved.

That difference matters because custody changes the relationship between a user and a service provider. When people retain control of their tokens, their exposure and the provider’s role may look different from a setup in which a third party controls or administers assets. A single set of obligations could therefore fit one model poorly, either by placing unnecessary demands on direct participation or by failing to account for the added responsibilities of a custodian.

The foundation’s position doesn’t establish that every form of delegation is risk-free. It argues that rules should track the details of the service. If you’re working in this space, that distinction is likely to shape how you describe a product, identify who has control of assets and decide which requirements may apply.

Clarify boundaries and application

The response also called for preserving MiCA’s boundary with traditional financial rules such as MiFID II. Whether a token qualifies as a financial instrument, the foundation argued, should depend on its substantive features rather than its technical format. That principle would make the token’s rights and structure more relevant than the fact that it exists on a blockchain.

The foundation wants greater clarity around hybrid tokens and uneven national interpretations, while opposing an expanded regulatory perimeter or new categories that could cause overlap. Hybrid tokens can raise difficult classification questions because a single asset may combine features associated with different kinds of products. If the rules don’t explain how those features should be assessed, businesses and authorities may reach inconsistent conclusions.

That uncertainty has practical consequences. A project operating across borders needs to understand which rules apply and whether the answer changes from one member state to another. More consistent interpretation could help businesses plan and help users understand the protections attached to a product. But new labels or overlapping categories could create another layer of ambiguity, especially if they don’t map cleanly to the activity being regulated.

Stablecoins, sustainability and NFTs

Other proposed improvements include clearer treatment of stablecoins with multiple issuers, fewer conflicts with payment rules, sustainability disclosures that reflect differences between blockchain designs, and stronger safeguards for NFTs that are genuinely unique. These topics don’t all raise the same policy question. Together, though, they show the foundation’s broader case for rules that account for how a particular asset or service works.

Stablecoins with multiple issuers can make it harder to identify who is responsible for particular functions. Clearer treatment could help establish how obligations apply across those roles. The response also points to possible conflicts between MiCA and payment rules, a concern that reflects the practical difficulty of applying separate frameworks to products that may combine crypto and payment functions.

Sustainability disclosures pose a different challenge. If disclosure requirements treat distinct blockchain designs as interchangeable, the resulting information may not explain their differences well. A more tailored approach, as the foundation proposes, would aim to make disclosures more relevant to the systems being described. And for NFTs, the call for stronger safeguards is specifically tied to tokens that are genuinely unique—an important qualifier in a category where labels alone may not tell users what an asset represents.

The test is clearer rules, not simply more rules

The foundation sees added compliance costs and complicated requirements as potential barriers for smaller projects, with a risk of discouraging innovation in Europe as global competition grows. That concern is plausible, but it doesn’t settle the policy question: regulators still need rules that can address real risks and be applied consistently. The numbers here aren’t the point; the dispute is over whether a broader framework would improve oversight enough to justify its added burden.

This is more significant than it looks. The way MiCA draws boundaries could influence which activities businesses offer, how they structure services and what users can reasonably expect from providers. Yet unclear requirements can impose costs of their own, especially when projects have to interpret overlapping rules or contend with uneven national approaches.

(And this is the part most people overlook.) Legal certainty isn’t only a convenience for companies; it also affects whether customers can tell who is responsible when a service holds assets or makes decisions on their behalf. A rule that distinguishes those roles could make accountability easier to understand. A rule that blurs them could leave both providers and users guessing.

The foundation’s preferred course is to refine the existing framework. MiCA’s practical test will be whether clearer, more consistent rules can address specific risks without sweeping distinct blockchain activities into the same category. Harder to apply consistently. If the Commission’s approach can explain where one activity ends and another begins, the result may be more useful than a wider set of requirements whose boundaries remain contested.