Coinbase's head of EU policy, Roeland Van der Stappen, warned that tighter EU oversight of decentralized finance (DeFi) could push crypto users toward platforms with fewer investor protections. Van der Stappen said regulated platforms might reduce or discontinue access to DeFi services in response. Van der Stappen argued that investor-protection rules could consequently move activity to services offering the weakest protection.
The European Securities and Markets Authority recommended a new regulated crypto-service category covering firms that provide customers with access to DeFi protocols. The recommendation appeared in the authority's September response to the European Commission's consultation on the Markets in Crypto-Assets Regulation (MiCA). The European Banking Authority urged the Commission in September to examine additional rules governing crypto lending and borrowing. The proposed examination would include regulated platforms providing customer access to DeFi lending protocols. The authority's consultation response identified suitability tests as a possible measure. Suitability tests evaluate whether a service is appropriate for a particular customer.
Van der Stappen said applying suitability tests to other DeFi services could give simple stablecoin swaps the same treatment as leveraged lending despite different risks. Van der Stappen identified lending, liquidity provision and on-chain swaps as the activities most exposed to such requirements. Van der Stappen said some providers might reduce available services or stop providing DeFi access entirely. Van der Stappen advocated allowing crypto-asset service providers to maintain access under safeguards tailored to each activity.
Van der Stappen said restrictions on access through regulated platforms could divide DeFi liquidity among smaller pools and give EU users worse trading prices. Van der Stappen said the restrictions could foster isolated DeFi services and direct users to providers outside the EU offering fewer safeguards.
A 2026 Adan-Ipsos survey found that exchanges were the preferred route into DeFi for 49% of French crypto buyers. The survey found that 14% preferred personal wallets. A Chainalysis report released on Monday linked a modest decrease in Germany's crypto activity largely to reduced decentralized exchange activity. Crypto activity across the EU increased by 2.2% over the 12 months through June 2026. A separate Chainalysis report from 2025 characterized DeFi as a relatively small but expanding part of Europe's crypto market. Chainalysis identified May 2025 as the peak month for DeFi lending in the European Economic Area during the period examined.
Coinbase Warns EU DeFi Regulations May Drive Users to Less Protected Platforms
CoinTelegraphShare
Summary
Coinbase's EU policy head, Roeland Van der Stappen, said MiCA could push users to less protected platforms by tightening DeFi oversight. He warned that crypto exchange regulations might lead exchanges to cut DeFi services to comply with investor protection rules. European regulators including ESMA and EBA are pushing for new rules on DeFi protocols, lending, and borrowing. Van der Stappen said applying suitability tests to DeFi under MiCA may harm low-risk activities like stablecoin swaps. He also said overregulation could fragment liquidity and shift traffic to non-EU platforms.
Source:Show original
Disclaimer: The information on this page may have been obtained from third parties and does not necessarily reflect the views or opinions of KuCoin. This content is provided for general informational purposes only, without any representation or warranty of any kind, nor shall it be construed as financial or investment advice. KuCoin shall not be liable for any errors or omissions, or for any outcomes resulting from the use of this information.
Investments in digital assets can be risky. Please carefully evaluate the risks of a product and your risk tolerance based on your own financial circumstances. For more information, please refer to our Terms of Use and Risk Disclosure.