EBA Calls for Regulation of Crypto Lending Under MiCA Framework

The European Banking Authority (EBA) is urging the EU to bring crypto lending and borrowing under its Markets in Crypto-Assets (MiCA) framework. This move could lead to new requirements for firms that connect users with decentralized-finance protocols.

The EBA's proposal forms part of the European Commission's review of MiCA, which also covers stablecoin rules, crypto-asset classifications, and reporting requirements.

The watchdog recommended a cost-benefit analysis of legislative changes to add intermediary crypto borrowing and lending under MiCA. This includes considering specific compliance obligations and additional oversight for firms involved in these activities.

The EBA outlined possible safeguards for companies that give customers access to decentralized-finance lending protocols, such as user suitability tests, leverage limits, and expanded disclosures.