The European Union’s first comprehensive crypto framework is about to enter a new phase, but regulators are already confronting a difficult reality: decentralised finance doesn’t fit neatly into existing laws.

Peter Kerstens, an advisor to the European Commission and one of the key figures involved in shaping Europe’s digital asset policies, has suggested that creating a second version of the Markets in Crypto-Assets Regulation specifically for DeFi may not be the right path forward.

Instead, Kerstens believes policymakers should shift their attention toward building a broader framework capable of addressing how blockchain technology interacts with traditional assets through tokenisation.

His comments arrive at a critical moment for the industry. MiCA’s transition period officially ends on July 1, meaning crypto service providers operating without the required MiCA authorisation will no longer be permitted to continue offering services within the European Union.

For exchanges, custodians, and other centralised businesses, the message is clear: comply or step aside. But for decentralised networks, the situation is far less straightforward.

Why DeFi Doesn’t Fit Inside MiCA

The rise of decentralised finance has challenged regulators around the world because it removes many of the intermediaries that existing laws were built to supervise.

Unlike traditional financial institutions, DeFi protocols often operate through smart contracts deployed on blockchain networks without a clearly identifiable company managing day-to-day activities. Users interact directly with code, creating an ecosystem that functions differently from banks, brokerages, and even most crypto exchanges.

Although the European Commission’s consultation papers have identified DeFi as an emerging area of potential risk, these protocols currently sit largely outside MiCA’s scope.

According to Kerstens, that’s not necessarily because regulators have overlooked the sector. The problem is more fundamental.

Laws are designed to apply to people, organisations, and legal entities. They aren’t built to govern computer networks themselves.

As reported by Cointelegraph, Kerstens argued that lawmakers would need to develop an entirely new theory of regulation if they intend to oversee decentralised systems effectively.

That perspective highlights one of the industry’s biggest unresolved questions. If there is no central operator, who exactly carries the responsibility for compliance?

Developers? Governance participants? Token holders? Front-end providers? Regulators across multiple jurisdictions have struggled to reach a consensus.

MiCA’s Biggest Test Is About to Begin

While debate over DeFi continues, MiCA itself is entering one of its most important stages.

The framework was introduced to bring greater clarity to Europe’s crypto industry after years of fragmented national rules. Its goals include improving consumer protection, strengthening market integrity, and creating a single regulatory standard across EU member states.

The July 1 deadline effectively marks the end of the adjustment period granted to crypto firms.

Any crypto asset service provider that has not secured the necessary MiCA licensing arrangements will be required to stop operating within the bloc. For major exchanges and service providers, this transition has involved significant investments in legal teams, compliance systems, and operational restructuring.

Despite criticism from some corners of the industry, Kerstens does not believe the regulation has become obsolete.

“I do not believe that [MiCA] is outdated now. That’s my personal opinion, but it does not matter. That’s why we have this consultation.”

His remarks suggest that European regulators remain open to feedback rather than rushing into a second wave of legislation before understanding how MiCA performs in practice.

Kerstens also questioned whether DeFi can be regulated in the conventional sense at all.

According to Cointelegraph’s report, he added that he doesn’t currently see a need to regulate DeFi, describing it as a “movement” that has “no representatives.”

That statement is likely to fuel further discussion among policymakers and industry participants who remain divided over whether decentralised systems require oversight comparable to traditional financial institutions.

Tokenised Assets Are Becoming Impossible to Ignore

Even as DeFi oversight remains uncertain, another blockchain trend is quickly climbing the regulatory agenda.

Tokenised real-world assets, commonly referred to as RWAs, have emerged as one of the fastest-growing sectors within digital finance. These products bring traditional assets onto blockchain networks by representing ownership digitally.

Government bonds, private credit instruments, commodities, and other conventional investments can all be tokenised, allowing them to interact with blockchain-based infrastructure.

The growth has been difficult to ignore.

According to data from DeFiLlama, tokenised RWAs have expanded by approximately 66 percent since the beginning of 2026. The rapid increase reflects growing institutional interest in combining the efficiency of blockchain technology with the familiarity of traditional financial products.

Unlike some speculative corners of crypto markets, tokenisation has attracted attention from major financial institutions seeking practical applications for distributed ledger technology.

Banks see opportunities to improve settlement times. Asset managers view tokenisation as a way to unlock liquidity and broaden access to investment products. Investors are increasingly exploring blockchain systems that bridge traditional finance with emerging digital ecosystems.

For regulators, however, this evolution raises fresh questions around investor protection, legal ownership rights, disclosure obligations, and cross-border compliance.

The discussion unfolding in Brussels suggests Europe’s next regulatory challenge may not revolve solely around cryptocurrencies anymore.

MiCA was designed to establish order in the crypto industry. But as decentralised networks evolve and tokenised assets gain momentum, policymakers are discovering that digital finance has already moved beyond the categories that existing rules were created to address.

Whether that leads to an entirely new framework for DeFi or a broader overhaul focused on tokenised assets remains uncertain. What is clear is that Europe’s crypto rulebook is entering a new chapter just as innovation begins testing its limits.