(MENAFN– CoinXposure)
The Association of Financial Markets in Europe (ASME), an industry advocacy group that represents wholesale market participants in Europe, has advocated for the incorporation of the decentralized finance (DeFi) sector in the recently enacted regulations for markets in crypto assets (MiCA).
MiCA is regarded as the first prospective comprehensive crypto legislation, with a December 2024 implementation date.
However, the crypto legislation excludes certain crypto ecosystem components, such as DeFi and nonfungible tokens (NFTs).
In a paper addressed to the European Council, the ASME argued that the exclusion of DeFi could create unintended risks to financial stability as well as potential ripple effects.
The paper suggested that the EU develop a taxonomy for DeFi activities and digital assets using a risk-based methodology.
In terms of governing a decentralized ecosystem such as DeFi, the trade association proposed a consistent regulatory framework in addition to varying degrees of centralization.
The trade association added that their request should not be viewed as a definitive solution but rather as a discussion on constructing the“foundational piece of work to further explore some of the technical issues posed by this new area of digital finance, as well as raise some initial proposals on how DeFi could be addressed from a regulatory standpoint.”
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The trade association seeks to initiate an industry-wide dialogue on this topic and develop innovative policy solutions for DeFi with both the public and private sectors.
MiCA is presently in the consultation phase, through which the European Union will begin a three-part consultation procedure in July.
The measures and suggestions gathered during the consultation phase are subject to approval by the european commission , the European Parliament, and the European Council.
