EBA Seeks EU Regulation of Crypto Lending Under MiCA
The European Banking Authority (EBA) has called on the European Commission to regulate crypto lending and borrowing under the Markets in Crypto-Assets Regulation (MiCA). The recommendation aims to address concerns over unchecked DeFi exposure, stablecoin arbitrage, and the reuse of collateral across chains.
The EBA cites a report that found crypto borrowing and lending being intermediated in at least 16 member states. It also highlights the growth in volumes and values of both intermediated and DeFi lending, including lending that uses stablecoins.
The proposed regulations would require licensed crypto firms to conduct suitability tests for users, impose leverage limits, and provide stronger pre-contractual disclosures. The EBA also recommends setting separate requirements for CASPs that help clients reach DeFi lending protocols.