MakerDAO founder: DeFi front-end may need to register in Europe and obtain a license to operate

The EU's landmark crypto-asset market law "MiCA" will officially enter into force in June 2024, which will make the EU the first in the world to have a tailor-made, comprehensive encryption Jurisdictions with monetary regulations, but MiCA may involve the supervision of DeFi, which is causing doubts in the cryptocurrency industry.

Cointelegraph reported last week that the EU may pass MiCA regulations requiring DeFi applications to obtain licenses. According to MiCA regulations, the European Commission is required to prepare a report before December 30 this year to evaluate the DeFi market and target DeFi. The EU has not yet made any decision on the feasibility of special supervision.

Will DeFi front-end need to obtain a license?

Rune Christensen, co-founder of Makerdao, recently tweeted that the specific interpretation of MiCA may cause interference to DeFi operations in Europe. He has heard that European financial regulators may require every local DeFi front-ends need to register and obtain a license to operate: I heard today that financial regulators in all EU countries are likely to interpret DeFi front-ends as requiring a MiCA license. This would make it impossible for DeFi frontends as we know them today to operate via ordinary internet domain names. Only fully decentralized, local, downloadable frontends or fully KYC online frontends would be possible, which is sad. This will come into effect in 2025.

Bitcoin.com reported that the front-end is an important interface for users with weak technical capabilities to interact with the DeFi protocol, which can promote new users to join and simplify operations. Although the absence of a front-end will not make DeFi completely unusable in Europe, But it will hinder access to DeFi protocols for most users who do not have the expertise to interact directly with the protocols.

In Rune Christensen’s opinion, this will lead to a setback in Europe’s access to DeFi, while the DeFi front-end will operate as usual in other parts of the world, which means “users outside the EU will be happily unaffected, and The EU will regress to the Stone Age."

National regulatory agencies can choose to ignore

However, Tradingstrategy co-founder Mikko Ohtamaa pointed out that the decision to restrict the DeFi front-end originated from the 2023 Financial Action Task Force (FATF) guidelines. But national regulators can choose not to follow the rules or even ignore them.

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