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Regulation & Policy · 1 min read

EU DeFi Proposals Risk Driving Users to Unregulated Platforms, Coinbase Warns

Coinbase's EU policy lead argued that expanding MiCA compliance burdens to DeFi gateways could fragment liquidity and push traders outside the bloc.

Editorial oversight: Julian Mercer, Chief Editor
Bearish

At a glance Open consultation

What happened
Coinbase's EU policy chief warned that regulatory proposals from ESMA and the EBA to supervise DeFi access points could push users toward unregulated foreign venues.
Why it matters
Enforcing exchange-level suitability tests and licensing requirements on protocol access could fragment on-chain liquidity and reduce execution quality for EU traders.
Who is affected
EU-regulated crypto-asset service providers, decentralized finance users in the EU, and centralized exchange operators.
What's next
The European Commission will review consultation responses from supervisory authorities to determine if MiCA rules should formally expand to DeFi access.
Primary source
cointelegraph.com: EU DeFi proposals could push users to riskier platforms, says Coinbase exec

Key points

  • Coinbase warned that proposed EU rules on DeFi access could prompt regulated venues to drop decentralized features entirely.
  • The European Banking Authority proposed suitability assessments for crypto lending and borrowing via regulated gateways in September.
  • A 2026 Adan-Ipsos study showed 49% of French crypto purchasers favor accessing DeFi protocols through exchanges rather than self-custody wallets.

European Union initiatives to expand regulatory oversight into decentralized finance risk steering digital asset users toward platforms with fewer consumer protections, according to Coinbase's head of EU policy 1.

Roeland Van der Stappen warned that regulated crypto-asset service providers (CASPs) could respond to heavier compliance mandates by narrowing their offerings or removing decentralized finance gateways entirely 1. In September, the European Securities and Markets Authority submitted recommendations to the European Commission advocating for a new category of regulated services targeting intermediaries that facilitate access to DeFi protocols 1. This aligns with broader proposals examined by European regulators, including measures explored when ESMA recommended bringing DeFi access under MiCA 1.

Supervisory Scrutiny on Lending and Swaps

Concurrently, the European Banking Authority urged the European Commission in September to review fresh restrictions on crypto lending and borrowing, proposing investor suitability assessments when regulated venues connect users with decentralized lending systems 1. Van der Stappen noted that applying standardized suitability evaluations broadly could mistakenly regulate basic stablecoin swaps under the same scrutiny as leveraged borrowing 1. The most directly impacted operations would include lending, liquidity provision, and on-chain token swaps 1.

Limiting gateway access within licensed venues could also split on-chain liquidity into isolated pools, leading to wider price slippage for European market participants and encouraging offshore flight 1. Domestic demand for intermediary access remains high: a 2026 Adan-Ipsos survey highlighted that 49% of French crypto buyers preferred interacting with DeFi through centralized exchanges, compared with 14% relying on personal unhosted wallets 1. The warnings come as European crypto engagement expanded 2.2% in the 12 months through June 2026, even as decentralized exchange volumes dipped in jurisdictions such as Germany, according to Chainalysis 1.

Questions this story raises

What did ESMA and the EBA recommend regarding DeFi in September?
ESMA recommended establishing a dedicated regulated service category for platforms providing DeFi protocol access, while the EBA suggested evaluating suitability assessments for crypto lending and borrowing gateways.
Why is Coinbase concerned about suitability tests for DeFi?
Coinbase argued that generalized suitability tests could treat low-risk activities, such as simple stablecoin swaps, the same as high-risk leveraged borrowing, causing exchanges to withdraw services entirely.

Sources

  1. [1] EU DeFi proposals could push users to riskier platforms, says Coinbase exec — cointelegraph.com, November 12, 2026

Written by Basis Desk's newsroom system from the primary sources above and machine-verified against them before publication. Market figures marked "at the time of writing" come from live exchange data. Report an error: corrections@basisdesk.news · corrections policy.

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