The European Banking Authority has urged that digital asset lending be integrated into the European Union’s Markets in Crypto-Assets framework as authorities weigh up potential amendments to MiCA.
Replying to the European Commission’s focused consultation regarding MiCA, the EBA stated that borrowing and lending involving crypto should face regulation, including instances where digital asset service providers enable entry to decentralized finance lending platforms.
The supervisory body advised the EC to perform a cost-benefit evaluation concerning legislative updates that might incorporate the intermediation of crypto borrowing and lending into the category of services governed by MiCA, which could introduce dedicated compliance mandates and supervision. Furthermore, it proposed specific obligations for crypto businesses granting customers access to decentralized finance lending networks.
The EBA detailed possible safeguards, such as client suitability assessments, leverage caps, and extra transparency obligations. The authority additionally mentioned the prospect of limiting participation in lending activities that involve asset-referenced tokens or e-money tokens demanding MiCA approval, alongside establishing an accreditation system for decentralized finance lending platforms.
The EBA noted that crypto lending is expanding throughout the region, pointing to past studies revealing borrowing and lending operations across a minimum of 16 EU member countries. It pointed out that simplified access to decentralized finance via digital asset companies and artificial intelligence applications is progressively fading the line separating centralized from decentralized finance.
These suggestions are part of the EBA’s wider contribution to the Commission’s evaluation of MiCA, which likewise addresses stablecoin regulations, digital asset categorization, and reporting duties.
Related: EU watchdogs warn quantum computers could pick crypto’s locks
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