The Association of European Financial Markets (AFME), an organization representing European wholesale markets, has sounded the alarm over the exclusion of DeFi from the European Union’s rules on crypto asset markets (MiCA). 

A new AFME report highlights that ignoring DeFi could undermine the effectiveness of the EU regulatory framework:

“The industry is in its infancy and is constantly developing. Although the use cases of capital markets are still relatively unknown, AFME believes that DeFi, which operates within the regulatory perimeter, can scale to successful future use cases and achieve wider adoption along with other use cases of distributed ledger technologies in capital markets.”

MiCA, an EU regulation recently adopted to provide legal guarantees to investors and businesses in the field of crypto assets, does not currently apply to DeFi.