EU Banking Watchdog Pushes Crypto Lending Rules Under MiCA Framework

The European Banking Authority (EBA) has called on the European Commission to bring crypto lending and borrowing under the Markets in Crypto-Assets (MiCA) regulatory framework, citing rapid growth in the sector and rising risks from decentralized finance (DeFi) integration. In its formal response to the Commission's targeted MiCA consultation, the EBA recommended that lawmakers evaluate the cost and benefits of extending MiCA's scope to cover intermediated crypto borrowing and lending activities, potentially adding specific compliance obligations and supervisory requirements.

Beyond traditional lending, the EBA outlined a set of measures targeting crypto firms that give clients access to DeFi lending protocols. These proposed safeguards include mandatory suitability tests for users, leverage limits, enhanced disclosure requirements, and a possible certification regime for DeFi lending protocols. The regulator also floated the idea of restricting access to lending activities involving asset-referenced tokens or e-money tokens that already require MiCA authorization, signaling a tightening posture toward riskier digital asset products.

The EBA's recommendations are grounded in growing market activity across the bloc, with previous research identifying borrowing and lending operations in at least 16 EU member states. According to the watchdog, easier access to DeFi through centralized crypto firms and the rise of artificial intelligence tools are increasingly blurring the line between centralized and decentralized finance, complicating oversight. The proposals form part of the EBA's broader input into the Commission's ongoing MiCA review, which also addresses stablecoin rules, crypto-asset classification, and reporting requirements, shaping the next phase of EU digital asset regulation.