The foundation called for regulation based on financial risks rather than technology, warning that overlapping rules could create uncertainty for crypto businesses across the EU.

The Cardano Foundation has urged the European Union not to introduce new, standalone regulations for decentralized finance and staking, arguing that existing financial laws should govern such activities based on their functions and risks rather than the technologies they use.

In a Wednesday blog post outlining its 19-page Sept. 30 submission to the European Commission, the foundation called for a distinction between direct participation in decentralized networks and financial services provided by intermediaries, particularly those involving custody or control of users’ 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 wrote.

The foundation said Cardano users can delegate their native ADA (ADA) tokens to help secure the network without surrendering custody or locking their tokens, arguing that such participation should be treated differently from staking services operated by intermediaries.

The submission also called for clearer distinctions between the EU’s Markets in Crypto Assets Regulation (MiCA) and existing financial laws, warning that overlapping requirements and inconsistent interpretations across member states could create uncertainty for crypto businesses.

The foundation’s position comes as EU regulators consider expanding oversight of crypto services. In September, the European Securities and Markets Authority (ESMA) recommended additional safeguards for staking, lending and borrowing, along with a new regulated service category for firms providing access to DeFi protocols.

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