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Published Oct 21, 2026
The Cardano Foundation has formally cautioned the European Union against introducing new, standalone regulatory frameworks specifically tailored for decentralized finance and staking activities. In an extensive response to regulatory consultations, the organization argued that existing financial laws should instead govern these activities based on their inherent functions and economic risks, rather than the underlying technology utilized to execute them.
The stance was detailed in a Wednesday blog post by the foundation, which outlined a comprehensive 19-page submission originally delivered to the European Commission on September 30. Within the submission, the foundation emphasized the critical need for regulatory frameworks to establish a clear legal distinction between direct, trustless participation in decentralized blockchain networks and the provision of traditional financial services by centralized intermediaries—particularly those entities that maintain custody or exert direct control over user assets.
“Regulation should follow the substance of an activity, the functions performed, and the risks created, not the technology through which it is conducted,” the foundation asserted in its official documentation.
At the core of the foundation’s argument is the operational reality of proof-of-stake networks like Cardano. The organization highlighted that Cardano users are able to delegate their native ADA tokens directly to stake pools to help secure and validate the network without ever having to surrender custody of their funds or lock their tokens away in a third-party contract. Because native delegation does not expose users to the traditional counterparty risks associated with centralized custodianship, the foundation argues that such direct participation should be evaluated and treated fundamentally differently from custodial staking services operated by commercial intermediaries.
The detailed submission also addressed broader structural concerns regarding the implementation and interpretation of the EU’s landmark Markets in Crypto Assets Regulation. The foundation warned that the introduction of overlapping regulatory requirements, combined with potentially inconsistent legal interpretations across various European Union member states, could cultivate an environment of severe regulatory uncertainty for legitimate crypto businesses operating within the bloc.
This policy intervention arrives at a pivotal juncture as European regulators actively contemplate expanding the scope of oversight governing emerging crypto services. Just last month, the European Securities and Markets Authority recommended the implementation of enhanced safeguards specifically targeting staking, lending, and borrowing mechanisms. Furthermore, ESMA proposed the creation of an entirely new regulated service category explicitly designed to govern firms that provide retail or institutional access to decentralized finance protocols.
The push for sensible, risk-based regulatory frameworks is not isolated to the European theater. The Cardano Foundation has concurrently stepped up its engagement with regulators across the Atlantic. Just one day prior to its European blog post, the foundation joined forces with five other prominent blockchain and crypto organizations in an October 20 joint letter addressed to the United States Securities and Exchange Commission. That collaborative effort urged the American regulator to officially recognize digital commodities as non-securities under its proposed digital asset oversight framework, mirroring the organization’s global philosophy that regulatory oversight must remain anchored to economic substance and risk profiles rather than technological architectures.
