EU banking watchdog calls for crypto lending rules under MiCA
The EBA outlined potential rules for crypto lending and firms providing access to DeFi protocols as part of the European Commission’s MiCA review.
The European Banking Authority (EBA) has urged the regulation of crypto lending under the European Union’s Markets in Crypto-Assets (MiCA) framework, as the EU considers potential changes to the law. In response to the European Commission’s consultation on MiCA, the EBA proposed that crypto borrowing and lending should be governed, particularly where crypto asset service providers enable access to decentralized finance (DeFi) lending protocols.
The regulator proposed that the EU Commission carry out a cost-benefit analysis of legislative modifications that could introduce specific compliance requirements and oversight for intermediating crypto borrowing and lending. The EBA also suggested measures such as suitability tests for users, leverage limits, and more disclosure requirements.
Moreover, the regulator hinted at the possibility of curbing access to lending involving asset-referenced or e-money tokens that require MiCA authorization and establishing a certification regime for DeFi lending protocols. The EBA noted that crypto lending is expanding throughout the bloc, citing prior research indicating borrowing and lending activities in at least 16 EU member states.
The authority suggested that easier access to DeFi via crypto firms and artificial intelligence tools is progressively blurring the line between centralized and decentralized finance. These recommendations are part of the EBA's broader input into the Commission's review of MiCA, which also encompasses stablecoin rules, crypto-asset classification, and reporting requirements.
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