Brussels is reviewing whether crypto lending should fall under the Markets in Crypto Assets (MiCA) framework, a move that would expand the regulation's original scope. The European Commission initiated this process on May 20, 2026, by asking stakeholders for input on areas initially excluded from MiCA, specifically decentralized finance and crypto lending.
MiCA's initial rulebook did not include crypto lending. The current consideration stems from the complexities introduced by DeFi lending vaults, which channel billions of dollars into on-chain credit markets.
These vaults do not resemble conventional lending structures. Their legal status currently relies on non-binding interpretations that position them outside MiCA and existing EU fund rules.
The distributed nature of these vaults presents a regulatory challenge. They perform the economic functions of lending, but spread other functions across smart contracts and multiple participants rather than concentrating them within a single company.
Yuriy Brisov, an EU digital assets lawyer and partner at Digital Analogue Partners, said: "The law pertaining to vaults at present is unclear."
Morpho's Vault V2 architecture illustrates this complexity. The vault divides responsibilities among an owner, a curator, an allocator and a sentinel. The curator configures strategy and risk parameters, while the allocator executes asset allocations. The sentinel is designed to reduce risk within the vault. This distributed model complicates the identification of a single entity providing a regulated lending service under MiCA.
Jonathan Galea, a partner at Cahill Gordon Reindel, cautioned policymakers against treating lending vaults as a uniform category. Galea said: "Lending vaults solve more practical problems than they create."
He explained that lending vaults help direct fragmented liquidity into lending markets. Other types of vaults may engage in buying and selling crypto assets, and these different economic functions require distinct regulatory approaches.
The European Commission's targeted consultation on the MiCA review closes on Sept. 30.
