EBA Recommends Bringing Crypto Lending and DeFi Intermediation Under MiCA Regulation

The European Banking Authority (EBA) has proposed that crypto lending and Decentralized Finance (DeFi) protocol intermediation services be brought within the scope of MiCA, the European Union's crypto regulatory framework. The recommendation, aimed at closing regulatory gaps, comes as the European Commission reviews potential amendments to MiCA.

In its submission to the Commission's targeted consultation on MiCA, the EBA stated that not only direct lending by crypto firms but also the facilitation or support of customer access to DeFi lending protocols should be added to the list of regulated services.

The supervisory authority recommended that the Commission conduct a cost-benefit analysis ahead of any MiCA amendment to assess adding intermediated crypto lending to the list of regulated services. It also proposed introducing tailored compliance requirements and supervisory activities suited to the specific characteristics of such services.

Specific measures proposed by the EBA include customer suitability assessments, leverage limits, and additional disclosure obligations. The authority also raised the possibility of restricting access to loans linked to asset-referenced tokens or e-money tokens that require MiCA authorization.