Coinbase warns that EU DeFi regulation may push users towards platforms with less protection.

BlockBeats news, November 12: Roeland Van der Stappen, Coinbase's EU policy lead, stated that if the EU further expands suitability testing requirements for DeFi services, it could be counterproductive and push users toward platforms with fewer investor protection measures.

The European Banking Authority (EBA) previously recommended that the EU study new rules for crypto lending and borrowing businesses, and listed suitability testing as an optional regulatory measure. Van der Stappen believes that extending such testing to other DeFi services could lead to simple stablecoin swaps and high-leverage lending being subject to similar regulation, ignoring the risk differences between different businesses.

He pointed out that businesses such as lending, liquidity provision, and on-chain swaps could be significantly affected, and regulated platforms may therefore scale back services or even completely stop providing DeFi access points. This could also cause DeFi liquidity fragmentation, worsen trading prices, and push users toward platforms outside the EU with looser regulation.

He called for regulatory measures that match the specific business risks, allowing crypto asset service providers (CASPs) to continue offering DeFi services to users while setting necessary safeguards.