Decentralised finance (DeFi) refers to financial applications built on public blockchains and operated through smart contracts, enabling the provision of financial services without relying on traditional intermediaries. DeFi is a relatively small but growing part of the overall crypto market. Total value locked in DeFi in March 2026 is estimated to amount to roughly $95-100 billion, representing around 4% of global crypto-asset market value. Public authorities including the BIS however note that many DeFi platforms in reality operate in a relatively centralized way at present.

DeFi is currently used mainly for crypto-native activities such as trading on decentralised exchanges, collateralised lending and borrowing, staking and automated market making. Its technological features — notably smart contracts, composability and automated execution — may also support the delivery of traditional financial services in a more efficient manner and, over time, contribute to more efficient market infrastructures and the development of tokenised financial services.
DeFi also gives rise to additional risks beyond those associated with broader crypto-asset activities and their interaction with the traditional financial system. These include risks related to the automatic execution of smart contracts, the reliance on oracles to connect to external data sources, and the decentralised governance of DeFi platforms, as well as heightened exposure to cyber-attacks.

At present, genuinely decentralised DeFi activities remain largely outside the scope of the EU regulatory framework, as MiCA does not apply where crypto-asset services are provided in a fully decentralised manner without any intermediary, and it does not specifically regulate certain activities such as crypto-asset lending and borrowing. The treatment of DeFi is expected to be further assessed in the context of the MiCA review scheduled for 2027. Policy work on DeFi is ongoing at the international level. IOSCO published policy recommendations on DeFi in late 2023 and the FSB has also issued recommendations aimed at addressing market integrity and financial stability risks. This work follows a principles- and risk-based approach and is expected to be further developed, notably to improve monitoring, data availability and the understanding of DeFi-related risks.