Europe gears up to regulate DeFi in 2026 as MiCA leaves sector in limbo

Europe plans to regulate decentralized finance in 2026, as lawmakers still struggle to define decentralization under MiCA, an EU crypto policy expert said.

European lawmakers have yet to define “decentralization,” even as regulators begin preparing for decentralized finance (DeFi) to become a key focus of crypto policy in 2026.

The world’s first comprehensive regulatory framework for the crypto industry, the Markets in Crypto-Assets Regulation (MiCA), went into effect on Dec. 30, 2024. Among its aims are to boost investor protection, prevent fraud and address stablecoin reserve management.

Still, as MiCA enters its final implementation phase, policymakers are shifting their attention to regulating DeFi, where many questions remain unresolved, according to Vyara Savova, senior policy lead at the European Crypto Initiative (EUCI).