MiCA Revisited: Brussels Targets DeFi Vaults Amid Regulatory Uncertainty

The European Commission is revisiting the Markets in Crypto Assets (MiCA) framework to address gaps in regulating decentralized finance (DeFi) and crypto lending/borrowing.

Lending vaults, on-chain structures that facilitate large pools of assets into credit markets, have been left outside MiCA's original rulebook. Their legal treatment has relied on non-binding interpretations, raising questions about who is responsible and what should be regulated.

The Commission's consultation highlights the complexity in classifying lending vaults, which can distribute roles across smart contracts and multiple participants rather than a single service provider. This makes it difficult to apply MiCA's rules, which require a clearly identifiable provider.

Regulatory experts argue that policymakers should avoid treating DeFi lending as a single bucket, since different vault designs have materially different economic functions and control dynamics. Instead, they suggest using structural and control-based criteria to decide whether regulation applies.