EU Banking Regulator Urges Crypto Lending Rules, Floats Leverage Caps and DeFi Certification

The European Banking Authority (EBA) recommended on Sept. 24 that the European Commission consider regulating crypto borrowing and lending under MiCA, the EU’s crypto rulebook, including where licensed crypto firms give customers access to DeFi lending protocols.

MiCA does not cover crypto lending today. It bars stablecoin issuers and crypto-asset service providers (CASPs), the intermediaries it licenses, from paying interest on stablecoins. Lending a stablecoin can still earn its holder a yield, and the EBA said in its written response that the activity “may pose regulatory arbitrage risks.”

The EBA wrote that crypto lending is “growing in volume and value” and cited a January 2025 joint report with ESMA that found it being intermediated in at least 16 member states. CASP interfaces, along with general-purpose AI tools, are making DeFi easier to reach, the regulator said, and crypto firms facilitating that access are “further blurring the boundary between centralised and decentralised finance.”

The EBA asked the Commission to run a cost-benefit analysis of two changes: adding the brokering of crypto borrowing and lending to the services MiCA regulates, and setting requirements for CASPs that connect clients to DeFi lending protocols.

Its options include suitability tests, leverage caps for some or all users, detailed disclosures, and warnings that activities on truly decentralized protocols “are unregulated and thus no safeguards apply.” It also raised “a certification regime for DeFi lending protocols,” which could at minimum assess a protocol’s resilience to cyberattack.

Another option would stop CASPs from brokering or facilitating lending that involves tokens meeting MiCA’s stablecoin definitions but lacking authorization. The EBA said two stablecoins dominate crypto lending. One is issued by an e-money institution. The other meets MiCA’s e-money token definition but cannot be offered to the public in the EU because “the issuer has chosen not to seek authorisation under MiCA.” The regulator did not name either token.

The response feeds the Commission’s MiCA review consultation, which opened on May 20 and closes Sept. 30. In their own response, the European Central Bank and the EU’s national central banks asked for MiCA’s stablecoin yield ban to reach lending, borrowing and staking.

The EBA also called for tighter rules on third-country multi-issuer schemes, in which an EU issuer issues the same token as a non-EU issuer, citing the “significant to very significant risks” they pose. It asked for a review of how much of an issuer’s reserves must be held as bank deposits. The EBA counted 39 e-money tokens issued under MiCA as of Sept. 1, and no authorized asset-referenced tokens.

The Commission said on its consultation page that its MiCA report may, “if warranted,” be accompanied by a legislative proposal to amend the regulation.

Related Listen: Crypto Has Seen Drama Over ENS, BonkDAO and VVV. What Does DeFi’s Future Look Like?

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