EBA Proposes Crypto Lending Rules Under EU’s MiCA Framework

The European Banking Authority (EBA) has urged the European Union to extend regulatory oversight to crypto lending and decentralized finance (DeFi) activities under the Markets in Crypto-Assets (MiCA) framework. In a response to the European Commission’s targeted consultation on MiCA, the EBA recommended that crypto asset service providers facilitating borrowing and lending—including those enabling access to DeFi protocols—be subject to new compliance requirements and oversight. The regulator suggested a cost-benefit analysis to determine whether these services should be incorporated into MiCA’s existing scope, potentially adding specific regulatory measures such as suitability assessments for users, leverage limits, and enhanced disclosure obligations. Additionally, the EBA proposed restrictions on lending involving asset-referenced or e-money tokens that require MiCA authorization and the establishment of a certification regime for DeFi lending platforms. The EBA highlighted that crypto lending activities are expanding across the EU, with borrowing and lending operations reported in at least 16 member states. It noted that advancements in artificial intelligence and easier access to DeFi through crypto firms are blurring the distinction between centralized and decentralized finance. The recommendations form part of the broader EBA input into the Commission’s review of MiCA, which also addresses stablecoin rules, crypto-asset classification, and reporting standards.