The European Union plans to begin regulating decentralized finance (DeFi) in 2026, but lawmakers are still struggling to define "decentralized" under the Markets in Crypto-Assets Regulation (MiCA).

Vyara Savova, Senior Policy Officer at the European Crypto Initiative (EUCI), stated that although MiCA will come into effect on December 30, 2024, DeFi protocols remain in a regulatory grey area. She added that EU authorities will begin to interpret how to legally define decentralization around mid-2026.

EUCI Executive Director Marina Markezic denied rumors about a MiCA II framework, stating that it will not happen, but discussions about stablecoins may lead to targeted legislative updates. The EU's new anti-money laundering rules will come into effect in 2027, restricting the use of privacy coins and anonymous crypto accounts.