Coinbase Calls for Differentiated Regulation of DeFi in the EU

Coinbase's EU policy head, Roeland Van der Stappen, stated that tightening DeFi regulations in the EU could lead crypto users to platforms with less investor protection, as regulated crypto platforms may limit or abandon DeFi services. He pointed out that rules aimed at protecting investors might push activities toward the least protected areas. Van der Stappen believes that if suitability tests are expanded to DeFi services beyond lending, simple stablecoin exchanges and leveraged lending could be treated equally, despite the differing risks, with lending, liquidity provision, and on-chain exchanges being most affected. He warned that restricting DeFi access on regulated platforms could lead to fragmented liquidity, resulting in worse trading prices for EU users. He suggested allowing crypto asset service providers (CASPs) to continue offering DeFi access while implementing appropriate safeguards based on the risks of different activities. Previously, the European Securities and Markets Authority (ESMA) suggested establishing a new category of regulated crypto services for companies providing access to DeFi protocols in response to the EU Commission's MiCA consultation in September; the European Banking Authority (EBA) also listed suitability testing as one of the options for regulating crypto lending.

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