EBA Seeks MiCA Expansion for Crypto Lending in EU

The European Banking Authority (EBA) has urged the European Commission to expand the Markets in Crypto-Assets (MiCA) framework to include crypto lending and borrowing by crypto-asset service providers.

This move aims to address risks associated with centralized providers and growing access to decentralized finance (DeFi) protocols, according to the EBA.

The regulator recommends conducting a cost-benefit analysis on legislative changes that would add intermediated crypto borrowing and lending to the list of services regulated under MiCA.

Safeguards proposed by the EBA include suitability tests for users, leverage limits, extra disclosure requirements, and a certification regime for DeFi lending protocols.