Many DeFi protocols will have to take a hard look at how they do business to ensure their platforms are truly decentralized and don’t fall afoul of the law.
DeFi’s exemption from MiCA regulation may fade as an update targets protocols with centralized components. The sector could split between hybrid and DeFi models.
He told Cointelegraph that the immediate question posed by this section of MiCA is what exactly is meant by “without an intermediary” and “in a fully decentralized manner”? Only natural persons and legal entities can hold rights and obligations, make and receive legal declarations, provide and receive services, and be the addressee of a law or be supervised under an act such as MiCA.However, Völkel believes that EU lawmakers correctly recognize that “none of this is the case if a crypto-asset service can be accessed without an intermediary in an exclusively decentralized manner.
In his opinion, “For those that do embrace decentralization, regulation such as that MiCA in Europe will draw clearer lines in the sand.” This new set of rules will provide more clarity on how to build truly decentralized applications to comply with the regulatory requirements. The DeFi sector can implement several workarounds to ensure decentralization, one important one being the decentralization of website front ends.Thomas Kroes, deputy executive director of Urbit — an open-source, P2P decentralized personal sever platform — explained to Cointelegraph that decentralized hosting offers protection for front-end services, as they can’t be taken down. He said that even Urbit couldn’t remove the content on its nodes if required.
Instalabs’ CEO Edward Adlard told Cointelegraph, “DeFi’s next evolutionary step is to get institutional, traditional finance money to participate.”
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