EU Banking Watchdog Calls for Crypto Lending Rules Under MiCA

The European Banking Authority (EBA) has called for crypto lending to be regulated under the Markets in Crypto-Assets (MiCA) framework. This move comes as regulators consider potential changes to MiCA, and the EBA suggests that crypto borrowing and lending should be brought under regulatory oversight.

The EBA's recommendations include conducting a cost-benefit analysis of legislative changes that could add intermediating crypto borrowing and lending to the list of services regulated under MiCA. This would potentially introduce specific compliance requirements and oversight activity for crypto firms that facilitate access to decentralized finance (DeFi) lending protocols.

The regulator also suggested requirements for suitability tests for users, leverage limits, and additional disclosure requirements. It raised the possibility of restricting access to lending involving asset-referenced or e-money tokens that require MiCA authorization and introducing a certification regime for DeFi lending protocols.