New regulations in the European Union may soon compel decentralized finance (DeFi) protocols to make challenging decisions. The EU's Markets in Crypto-Assets Regulation (MiCA) will require DeFi protocols to comply with licensing and Know Your Customer (KYC) requirements by the end of 2024. This could push DeFi protocols towards a more centralized 'hybrid finance' model or compel them to decentralize entirely. The regulation exempts fully decentralized protocols from MiCA requirements, but the definition of 'without an intermediary' and 'in a fully decentralized manner' remains ambiguous. As the regulatory landscape evolves, DeFi protocols in Europe must decide how to navigate these changes. Some may opt for decentralization, while others may embrace regulatory compliance to attract institutional investment. Regardless of the path chosen, DeFi protocols will need to adapt to the regulatory environment in the EU. Read more AI-generated news on: https://app.chaingpt.org/news
