The European Union kicked off a consultation Wednesday on whether to bring decentralized finance, prediction markets, and cryptocurrency perpetual contracts under the Markets in Crypto-Assets (MiCA) regulatory framework. The expansion would plug gaps left by the original 2023 law, which focused on centralized exchanges and stablecoins but largely skirted fully decentralized protocols and crypto derivatives.
What the consultation covers
The European Commission is asking for industry feedback on three specific areas. First, decentralized finance — think lending protocols, automated market makers, and yield aggregators that operate without a central intermediary. Second, prediction markets, where users bet on event outcomes using crypto. Third, perpetual contracts, the popular derivative product that lets traders speculate on price with leverage but no expiry date.
Each poses distinct regulatory problems. DeFi platforms may not have a clear legal entity to hold accountable. Prediction markets walk a line between gambling and finance. Perps often sit outside traditional derivatives oversight. The EU wants to know how to apply investor protections, market abuse rules, and licensing requirements to these products.
Closing the gaps
MiCA took effect in stages through 2024 and 2025, covering crypto-asset issuers, service providers, and stablecoins. But its definition of a "crypto-asset service provider" relies on someone providing the service — a natural or legal person. Fully automated smart contracts don't fit that mold. The consultation is the EU's first formal step toward rewriting those boundaries.
The timing isn't accidental. A number of DeFi protocols have quietly grown to handle volumes that rival centralized exchanges. Prediction markets saw a surge during the 2024 U.S. election cycle. And perpetual contract trading on platforms like dYdX and Hyperliquid has become a mainstay for leverage seekers. The EU wants rules in place before any major blowup forces its hand.
What happens next
The consultation is open for submissions now. No closing date has been announced yet. After gathering feedback, the European Commission will draft a legislative proposal, which would then need approval from the European Parliament and the Council of the EU. That process typically takes at least a year.
For now, firms operating in these areas have a chance to shape the rules — or brace for tighter oversight.
