EBA Pushes for Crypto Lending Regulation Under MiCA

The European Commission's MiCA consultation has closed on September 30th, and the European Banking Authority (EBA) has used this opportunity to ask for crypto lending to be regulated under MiCA. The EBA filed its response on September 24th, urging the Commission to bring crypto borrowing and lending inside MiCA as a regulated service.

The consultation is a targeted one, aimed at crypto-asset service providers, issuers, and public authorities such as national and European supervisors, central banks, and finance ministries. A separate public consultation runs alongside it and is linked from the same page.

The EBA's response targets Section 4.2 of the questionnaire, which covers staking, lending, and borrowing. The authority asks for a 'robust cost-benefit analysis' to consider legislative changes that would extend the list of crypto-asset service provider (CASP) services in MiCA to include intermediating borrowing and lending.

The EBA also recommends suitability tests and caps on leverage, citing regulatory arbitrage risks associated with lending in e-money tokens. The authority warns that lending in e-money tokens may pose risks because the interest prohibition pushes yield-seeking into lending instead.