ESMA Pushes for DeFi Regulation as EU Eyes $349 Billion Tokenized Securities Boom

The European Securities and Markets Authority (ESMA) has proposed regulations for decentralized finance (DeFi) and tokenized securities in the EU. ESMA wants to determine what 'genuinely decentralized' means, citing growth in DeFi and stablecoin activity.

Both ESMA and the European Banking Authority (EBA) agreed on regulating DeFi interfaces, with ESMA calling for a dedicated framework for firms intermediating DeFi access. EBA also warned about unlicensed stablecoins being used for yield farming.

ESMA pressed for more supervisory powers to enforce anti-money laundering (AML) laws and regulate tokenized securities. The regulator wants lenient stablecoin bank reserves and a new cyber-based certification framework for DeFi venues to ensure user safety.

The proposals are part of the ongoing MiCA review, with feedback expected by mid-2027. ESMA's push for regulation is in line with the US SEC's efforts to regulate tokenized securities via an 'Innovation Exemption'. Tokenized securities have already grown to $4.4B and 1% of stablecoin supply.