Big banks poised to embrace EU DeFi regulations, posing a challenge to crypto natives

Decentralized finance (DeFi) protocols in Europe may face significant challenges due to incoming regulations, while traditional financial institutions could be encouraged to enter the crypto space, according to Marina Markezic, executive director of the European Crypto Initiative. Markezic discussed the European Commission’s upcoming DeFi report, which is scheduled for release on December 30, 2024, under the Markets in Crypto-Assets (MiCA) framework. The report will explore the feasibility of specific regulations for the DeFi ecosystem. Markezic believes that the regulations will make it easier for traditional players to enter the crypto space, noting that some banks are already considering issuing stablecoins. The report is expected to provide initial definitions of decentralization as seen by regulators, acknowledging that DeFi exists on a spectrum with varying degrees of control and management. Rather than imposing strict rules, legal experts argue for clear standards and consensus on what constitutes DeFi. The DeFi market is projected to grow in Europe, with Statista predicting revenue of around $6.69 billion in 2024 and $9.68 billion in 2028.