Coinbase Executive Warns Extending EU Suitability Checks Could Limit DeFi Access

Coinbase head of EU policy Roeland Van der Stappen warned that extending suitability tests beyond crypto lending and borrowing could push EU users toward DeFi providers with fewer safeguards.

The European Banking Authority (EBA) listed suitability tests as one option in a consultation on crypto lending and borrowing. Such a test assesses whether a service is appropriate for a customer. Applying checks to other DeFi activities was a hypothetical outcome in Van der Stappen’s warning, rather than the scope of the EBA consultation. He said a basic stablecoin swap carries different risks from leveraged lending, even if a broader test could treat them alike.

Van der Stappen identified lending, liquidity provision and on-chain swaps as the DeFi activities most exposed to restrictions. Those services could face checks developed for lending, he warned. Regulated platforms could respond by narrowing their DeFi offerings or withdrawing access altogether.

Van der Stappen warned that those limits could steer users toward providers outside the EU with fewer safeguards and divide DeFi liquidity among smaller pools, potentially worsening trade prices for EU users. Van der Stappen warned that restrictions could create “walled gardens,” or isolated DeFi services. “Rules designed to protect investors would end up pushing activity towards the places with the least protection,” he said. He favored letting crypto-asset service providers continue offering DeFi access with safeguards matched to each activity.

The European Securities and Markets Authority (ESMA) recommended a regulated service category for firms that connect customers to DeFi protocols as part of the European Commission’s review of the Markets in Crypto-Assets Regulation (MiCA). ESMA’s recommendation focuses on service providers, while the EBA’s consultation concerns crypto lending and borrowing. The EBA separately asked the Commission to study crypto lending rules and DeFi access through platforms. The Commission is due to report to EU lawmakers by June 30, 2027, and its report could include proposals to amend MiCA.