The European Banking Authority on Sept. 24 recommended the European Commission add regulations for crypto borrowing and lending under the Markets in Crypto-Assets framework. The proposal targets licensed crypto-asset service providers that grant customers access to decentralized finance lending protocols.
MiCA currently does not cover crypto lending activities. While the existing framework bars stablecoin issuers and CASPs from paying interest on stablecoins, holders can earn yield by lending stablecoins—an activity the EBA flagged as regulatory arbitrage risk.
The EBA cited growing lending volumes across at least 16 member states, noting that CASP interfaces and general-purpose AI tools have lowered the friction to access DeFi. This blurs distinctions between centralized and decentralized finance.
The EBA asked the Commission to analyze two regulatory options. The first adds crypto borrowing and lending brokerage to MiCA's regulated services. The second establishes requirements for CASPs connecting clients to DeFi lending protocols.
Proposed requirements include suitability tests for users, leverage caps, detailed disclosures, and explicit warnings that truly decentralized protocols are unregulated. The EBA also suggested a certification regime for DeFi lending protocols to assess resilience to cyberattacks.
Another proposal would bar CASPs from brokering or facilitating lending involving tokens that meet MiCA's stablecoin definitions but lack proper authorization. The EBA identified two stablecoins dominating crypto lending activity: one issued by an e-money institution, and another that meets MiCA's e-money token definition but cannot be publicly offered in the EU because its issuer did not seek authorization. Neither was named.
This recommendation feeds into the Commission's MiCA review consultation, which opened May 20 and closes Sept. 30. The European Central Bank and EU national central banks separately submitted a response advocating for extending MiCA's stablecoin yield ban across lending, borrowing, and staking.
The EBA also called for stricter regulations on third-country multi-issuer schemes, where an EU issuer and non-EU issuer issue the same token, citing significant to very significant associated risks. It requested a review of the reserve requirements for stablecoin issuers. As of Sept. 1, the EBA counted 39 e-money tokens issued under MiCA but no authorized asset-referenced tokens.
