The European Union’s efforts to tighten oversight of decentralized finance (DeFi) could drive crypto users toward platforms with fewer investor protections, Coinbase’s head of EU policy said.
Roeland Van der Stappen told Cointelegraph that regulated crypto platforms could respond by restricting or ending access to DeFi services.
“Rules designed to protect investors would end up pushing activity towards the places with the least protection,” Van der Stappen said.
In its September response to the European Commission’s consultation on the Markets in Crypto-Assets Regulation (MiCA), the European Securities and Markets Authority recommended creating a new category of regulated crypto services for firms that give customers access to DeFi protocols.
EBA considers suitability tests for crypto lending
In September, the European Banking Authority (EBA) urged the Commission to examine new rules for crypto lending and borrowing, including cases where regulated platforms give customers access to DeFi lending protocols. In its consultation response, the EBA listed suitability tests—which assess whether a service is appropriate for a customer—as one possible measure.
Van der Stappen said applying such tests to other DeFi services could mean treating a basic stablecoin swap like leveraged lending, even though the risks differ.
Lending, liquidity provision and on-chain swaps would be the activities most at risk, he said. Some providers may scale back their offerings or withdraw access to DeFi entirely.
“A proportionate approach would be to allow CASPs [crypto-asset service providers] to continue offering that access with safeguards matched to the activity,” Van der Stappen said.
Coinbase warns of fragmented liquidity
Van der Stappen said restricting access through regulated platforms could divide DeFi liquidity into smaller pools and result in worse trade prices for EU users.
He said the restrictions could encourage “walled gardens,” or isolated DeFi services, and push users toward providers outside the EU with fewer safeguards.
A 2026 Adan-Ipsos survey found that 49% of French crypto buyers preferred accessing DeFi through exchanges, while 14% favored personal wallets.
A Chainalysis report on Monday attributed a modest drop in crypto activity in Germany largely to declining decentralized exchange activity. Across the EU, crypto activity rose 2.2% in the 12 months through June 2026.
A 2025 Chainalysis report described DeFi as a small but growing part of Europe’s crypto market. In the European Economic Area, May 2025 was the strongest month for DeFi lending activity during the period Chainalysis examined.
