EBA seeks MiCA expansion for crypto lending in EU

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EBA seeks MiCA expansion for crypto lending

Highlights

EBA urges European Commission to expand MiCA to include crypto lending and borrowing by crypto-asset service providers, including DeFi protocol access.
EBA recommends cost-benefit analysis of regulating intermediated crypto lending, suggests suitability tests, leverage limits, disclosure, and possible certification for DeFi protocols.
Proposed MiCA expansion could increase compliance and supervisory scrutiny for crypto firms, as crypto lending activity spans at least 16 EU member states.

Proposed MiCA changes for crypto lending

As reported by Cointelegraph, citing the European Banking Authority, the regulator has urged the European Commission to bring crypto borrowing and lending within the scope of the Markets in Crypto-Assets framework as part of its review of the rules.

In its response to the Commission's targeted consultation on MiCA, the EBA says regulation should cover lending services offered by crypto-asset service providers, including cases where those firms facilitate client access to decentralized finance lending protocols. The watchdog recommends that the Commission carry out a cost-benefit analysis on legislative changes that would add intermediated crypto borrowing and lending to the list of services regulated under MiCA.

The EBA also outlines possible safeguards including suitability tests for users, leverage limits and extra disclosure requirements. It raises the option of restricting access to lending involving asset-referenced or e-money tokens that require MiCA authorization, and suggests a certification regime for DeFi lending protocols.

Wider impact on EU crypto oversight

The regulator says crypto lending is growing across the bloc, citing earlier research that found borrowing and lending activity in at least 16 EU member states. It adds that easier access to DeFi through crypto firms and artificial intelligence tools is increasingly blurring the line between centralized and decentralized finance.

The recommendations are part of the EBA's broader contribution to the Commission's review of MiCA, which also covers stablecoin rules, crypto-asset classification and reporting requirements. Any expansion of the framework could increase compliance obligations and supervisory scrutiny for crypto firms operating in the EU.

In our earlier coverage, we examined the European Banking Authority’s warning that fragmentation in the EU banking market is limiting banks’ ability to finance the bloc’s digital, environmental and defence ambitions. We noted that differences in tax, insolvency and consumer-protection regimes raise the cost of cross-border services and push more funding toward non-bank players, while the EBA also signalled plans to simplify rules so supervisors and firms can focus on the most material risks.

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