EBA Asks EU to Study MiCA Rules for Crypto Lending and DeFi Access

The European Banking Authority (EBA) has asked the European Commission to assess MiCA changes for crypto-loan intermediaries and firms that connect customers to decentralized lending, putting possible new safeguards under review.

The request seeks a study of changes to the Markets in Crypto-Assets Regulation (MiCA), including adding crypto-asset borrowing and lending intermediation to the list of regulated crypto-asset service provider (CASP) activities. It also asks for requirements on CASPs that give clients access to decentralized finance (DeFi) lending. The EBA wants a cost-benefit analysis before legislative changes are considered, so the recommendation does not itself alter EU law or automatically extend MiCA to every DeFi protocol.

Potential measures for intermediaries include suitability assessments, limits on leverage and fuller disclosures. For CASPs facilitating DeFi access, options include additional risk warnings and a possible prohibition on facilitating borrowing or lending involving tokens that meet MiCA’s definitions of asset-referenced tokens (ARTs) or e-money tokens (EMTs) but lack authorization. A protocol certification program could also assess, at minimum, resilience to cyberattacks. These measures remain options for review, not requirements now in force.

At least 16 EU member states had crypto lending or borrowing intermediated within their borders. MiCA’s Recital 94 says the regulation should not address crypto-asset lending and borrowing and should not prejudice applicable national law. The EBA’s earlier recommendation on MiCA lending also raised questions about safeguards for firms connecting users to DeFi.

Separately, the European Securities and Markets Authority (ESMA) has proposed scaled rules for crypto lending and borrowing, including disclosure requirements, and a regulated service for firms that connect customers to DeFi protocols.

Wojciech Kaszycki, Strategy Advisor at BTCS S.A., said collateral-backed lending to businesses and wealthy clients could remain in the EU, while retail yield products might move to other jurisdictions. He summarized his view of oversight this way: “If the firm can lose your money, regulate the firm. If it can’t, you’re regulating a website.”

The Commission’s public consultation on its MiCA review ended Sept. 30. The review may be accompanied by a legislative proposal if warranted.