Coinbase warns EU DeFi rules could push users to less protected platforms

Coinbase flags DeFi regulatory risk

Coinbase's head of European regulatory policy, Ruuland van der Stappen, warned that new EU requirements for decentralized finance (DeFi) could push users toward less protected platforms, according to ForkLog. He said the restrictions risk causing an outflow of users and fragmenting liquidity.

The warning follows proposals from two European supervisory bodies. The European Securities and Markets Authority (ESMA) suggested introducing separate regulation for companies that provide access to DeFi. The European Banking Authority (EBA) said it could examine whether crypto lending is suitable for clients.

According to ForkLog, van der Stappen argued that tighter rules would not keep users on supervised venues but would instead move activity to platforms with fewer safeguards. The report did not specify which requirements Coinbase considers most problematic or what changes the company is seeking.

What is proposed and what remains open

ESMA's proposal would create a distinct regulatory category for firms offering access to DeFi, though the report does not detail the scope or timing of any formal rulemaking. The EBA's suggestion concerns suitability checks for crypto lending, a separate area of consumer protection.

Neither authority has announced final rules in the report. It is not clear whether the proposals will be adopted as described, how they would apply to non-custodial or decentralized protocols, or how Coinbase's concerns will be addressed in any final text.