Brussels is reviewing whether crypto lending and decentralized finance vaults should fall under the Markets in Crypto Assets (MiCA) framework. The European Commission asked stakeholders to weigh in on areas left outside MiCA on May 20, 2026.
MiCA's original rulebook did not include crypto lending. The current consideration marks a potential expansion of regulatory scope.
DeFi lending vaults pose a challenge for regulators because they channel billions of dollars into on-chain credit markets. These structures do not resemble conventional lending models, complicating efforts to determine specific regulatory targets.
The legal status of these vaults currently relies on non-binding interpretations, which suggest they fall outside both MiCA and existing EU fund rules.
Yuriy Brisov, an EU digital assets lawyer and partner at Digital Analogue Partners, said vault law is unclear. He noted vaults perform the economic functions of lending but distribute other functions across smart contracts and multiple participants rather than a single company.
Morpho's Vault V2 architecture illustrates this complexity. Its design segments responsibilities among an owner, curator, allocator and sentinel. The curator configures strategy and risk parameters, the allocator executes allocations, and the sentinel holds risk-reduction powers.
This distribution of roles makes identifying a single "provider" for a regulated lending service less straightforward compared to traditional lenders. Morpho's setup does not establish any participant as a regulated service provider under MiCA, but it highlights the difficulty in applying existing regulatory models.
Jonathan Galea, a partner at Cahill Gordon Reindel, analyzed how vault structures interact with EU financial regulation, including MiCA, stablecoin rules and European fund law. Galea advised policymakers to avoid treating lending vaults as a single category.
He said lending vaults solve practical problems by directing fragmented liquidity into lending markets. Vaults performing different economic functions, such as buying and selling crypto assets, should be treated distinctly.
A broad regulatory category covering "DeFi lending" could capture structures with varied economic functions and control dynamics, potentially affecting a diverse range of on-chain participants.
