The European Commission has opened a public consultation on extending the Markets in Crypto Assets (MiCA) framework to include crypto lending and decentralized finance (DeFi) vaults, with a deadline of September 30. The review, announced on May 20, 2026, follows the original MiCA regulation’s exclusion of lending services, leaving a regulatory gray area for vaults that facilitate billions in onchain credit without conventional intermediaries.
Legal experts highlight the ambiguity in classifying vaults, which operate through smart contracts and distributed roles rather than centralized entities. Yuriy Brisov, partner at Digital & Analogue Partners, notes the absence of a legal definition for vaults in EU law, describing them as entities defined by function rather than label. The challenge stems from their hybrid structure, where lending functions are distributed across multiple participants, complicating the identification of a regulated service provider.
Decentralized lending protocol Morpho illustrates the complexity. Its Vault V2 architecture splits responsibilities among an owner, curator, allocator, and sentinel, each managing distinct aspects of the lending process. While none of these roles align with MiCA’s current crypto asset service categories, the division underscores why pinpointing a regulated entity is difficult. Jonathan Galea, partner at Cahill Gordon & Reilden, argues against treating all lending vaults as a single category, warning that a broad regulatory label could misclassify structurally distinct protocols.
The debate centers on two potential approaches: assessing decentralization levels or focusing on structural control. Galea cautions that a decentralization test could disadvantage newer protocols, while Brisov advocates for a structural framework that examines direct coded claims and user exit rights. Michael Egorov, founder of Curve Finance, emphasizes the need for a tailored regulatory approach, arguing that DeFi lending requires different safeguards than traditional finance and should not be shoehorned into existing models.
The Commission’s consultation will shape whether lending vaults remain outside MiCA or fall under a new regulatory perimeter. The outcome could redefine compliance burdens for DeFi protocols and their users.
