EU Targets $54B DeFi Sector with Proposed Regulations

The European Union (EU) has set its sights on regulating the $54 billion DeFi sector, specifically targeting crypto lending and borrowing within the scope of the MiCA framework.

The European Banking Authority (EBA) has proposed introducing leverage caps, disclosure requirements, and cyber resilience-based certification for DeFi protocols to mitigate consumer protection risks such as over-leverage, contagion risks, hacks, and fraud.

Aave's Stani Kulechov has dismissed Morpho's proposed vault classification model, calling it 'self-serving' and stating that discretionary vaults should not be managed by asset managers, but rather left to users without a manager.