EU to Tighten Oversight on DeFi Lending with MiCA Rules

The European Union is considering stricter regulations for decentralized finance (DeFi) lending services as part of its ongoing review of the Markets in Crypto Assets (MiCA) framework.

The European Banking Authority (EBA) has recommended that crypto borrowing and lending services be brought within the scope of MiCA, which would require additional requirements such as suitability tests, leverage limits, and extra disclosures for firms providing crypto lending services.

The EBA also suggested considering restrictions involving regulated stablecoins and a certification regime for DeFi lending protocols. This move is part of the European Commission's review of MiCA, with legislative changes necessary before these recommendations can take effect.