Aave Challenges EU MiCA Proposal with Onchain Supervision Plan

Aave Labs has submitted its response to the European Union's review of the Markets in Crypto-Assets Regulation (MiCA). The company argues that MiCA obligations should fall on entities that exercise control over users or assets, rather than pulling open-source protocols into the same licensing framework.

Aave points out that more than $3.5 trillion has moved through its protocol since launch, with deployments spanning over 15 networks. It supports regulation for custodial and intermediated lenders but is concerned about extending the same framework to protocols that do not take possession of customer assets.

The company's proposal separates activities by control rather than treating every blockchain-based service as the same type of intermediary. It argues that regulators should draw a sharper line between financial intermediaries and decentralized software.