Key facts
- The EBA has called for crypto lending to be brought under the EU's MiCA framework.
- The EBA recommended that the EC conduct a cost-benefit analysis for legislative changes to regulate crypto borrowing and lending.
- The EBA suggested measures for crypto firms providing access to DeFi lending protocols, including suitability tests and leverage limits.
- The EBA noted that crypto lending is growing across the EU, with activities in at least 16 member states.
- The recommendations are part of the EBA's input into the EC's review of MiCA.
The European Banking Authority (EBA) has proposed that crypto lending activities, including those facilitated by crypto asset service providers accessing decentralized finance (DeFi) protocols, should be regulated under the European Union's Markets in Crypto-Assets (MiCA) framework. In its response to the European Commission's (EC) consultation on MiCA, the EBA suggested that the EC analyze the costs and benefits of amending MiCA to include these activities, which could introduce new compliance requirements and oversight. The regulator also outlined potential measures such as suitability tests for users, leverage limits, and enhanced disclosure requirements for crypto lending. Furthermore, the EBA raised the possibility of a certification regime for DeFi lending protocols and restrictions on lending involving asset-referenced or e-money tokens that require MiCA authorization. The EBA highlighted the increasing prevalence of crypto lending across the EU, noting its presence in at least 16 member states, and pointed out that easier access to DeFi through crypto firms and AI tools is blurring the lines between centralized and decentralized finance. These recommendations are part of the EBA's broader feedback on the EC's review of MiCA, which also addresses stablecoin rules, crypto-asset classification, and reporting requirements.