MiCA II: European Commission Tightens DeFi Compliance Rules

The European Commission has closed its consultation on the Markets in Crypto-Assets (MiCA) review, setting the stage for a new chapter in DeFi compliance. The review will directly shape how startups and DAOs manage the bridge between crypto and fiat, and it will be a high-stakes calibration of defining obligations clearly enough to be enforceable, but narrowly enough to preserve the permissionless core of DeFi.

The current review examines 'gap cases' including DeFi protocols, governance token-based DAOs that control treasuries, and crypto-fiat on-ramps that sit between wallets and traditional bank accounts. This makes it MiCA II in all but name: a framework designed to close the loophole that left DAO treasury management and self-custody operations largely outside the perimeter.

Regulators face a dilemma: on one side, they want to shield the single market from systemic risk and illicit flows, while on the other, industry participants warn that extending full crypto AML obligations to permissionless smart contracts could make compliance impossible without a central intermediary, effectively killing innovation.

For a startup or DAO that converts treasury tokens to EUR or USD, pays salaries, or settles vendor invoices, the crypto-fiat on-ramp is where regulation lands hardest. Under a tightened MiCA II, every fiat inflow and outflow from a DeFi wallet will need a documented KYB trail.

OneSafe, a financial technology company, provides neobanking services for global businesses and DAOs through bank partnerships. It absorbs the compliance processes - KYB, transaction monitoring, and custody - so the startup doesn't have to build them from scratch.