EU Banking Watchdog Seeks Regulation of Crypto Lending Under MiCA
The European Banking Authority (EBA) has urged regulators to bring crypto lending under the European Union's Markets in Crypto-Assets (MiCA) framework. In a response to the EU's targeted consultation on MiCA, the EBA suggested that crypto borrowing and lending should be regulated, including where providers facilitate access to decentralized finance (DeFi) lending protocols.
The regulator recommended conducting a cost-benefit analysis of potential legislative changes to add intermediating crypto borrowing and lending to the list of services regulated under MiCA. This could involve specific compliance requirements and oversight activity for crypto firms that provide clients with access to DeFi lending protocols.
The EBA suggested measures such as suitability tests for users, leverage limits, and additional disclosure requirements. The regulator also 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.