TREE NEWS update: Coinbase’s EU policy chief warned that extending suitability tests beyond crypto lending and borrowing to DeFi could limit user access and fragment liquidity, potentially pushing users toward riskier platforms. The executive said applying such requirements more broadly would constrain access to decentralized finance services across the bloc.
Coinbase EU Policy Chief Warns DeFi Rules Could Push Users to Riskier Platforms
AI take
The warning highlights a regulatory design tension: suitability tests are a consumer-protection tool, but applying them to permissionless DeFi could push activity toward venues outside the EU's supervisory perimeter, undermining the very protection intended. This matters most for EU-facing DeFi front-ends and the liquidity they aggregate, since fragmentation would be felt there first. Whether the EU treats DeFi access as a distribution channel subject to suitability or as a distinct category remains the open question to watch.
Generated by AI for reference only.
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