EBA Seeks to Broaden MiCA Regulation to Cover Crypto Lending and DeFi

The European Banking Authority (EBA) is pushing for the expansion of the Markets in Crypto-Assets (MiCA) regulation to cover more areas, including crypto lending and decentralized finance (DeFi) protocols. In its response to the European Commission's consultation on the future of the EU's crypto rulebook, the EBA urged for broader MiCA rules across the Union, citing regulatory gaps created by new products and business models.

The EBA wants to add crypto borrowing and lending activities to MiCA's regulated services, including cases where crypto-asset service providers connect users with decentralized lending protocols. The authority also suggested a certification system for decentralized lending protocols, so that regulated firms would only connect customers to protocols meeting set standards.

Additionally, the EBA highlighted concerns around stablecoin lending products, saying lending activities involving asset-referenced tokens (ARTs) and electronic money tokens (EMTs) could require additional restrictions under MiCA. The authority also proposed reviewing reserve rules for token issuers, which could lead to a change in the minimum share of reserves that must be held as bank deposits.

The European Central Bank and the 27 national central banks have also weighed in, asking the Commission to scrap the deposit requirement altogether and hold a minimum share of reserves in assets that mature within one to five working days.