The European Banking Authority (EBA) has asked the European Commission to consider bringing crypto lending and borrowing under the European Union’s Markets in Crypto-Assets Regulation (MiCA), including cases where licensed crypto firms give customers access to decentralised finance (DeFi) lending protocols.
The recommendation, published on Thursday, does not change any rule. It is formal advice to the Commission as Brussels reviews the crypto rulebook that applies to issuers from June 2024 and to most other crypto-asset rules from 30 December 2024, with the CASP transition ending on 1 July 2026.
The advice sits in the EBA’s response to the Commission’s targeted consultation on MiCA, formally known as Regulation (EU) 2023/1114. The EBA is the EU’s banking regulator and directly supervises issuers of significant stablecoins under MiCA. Its press release placed risks from third-country multi-issuer stablecoins first. Crypto lending was the other major item in the same filing.
What the EBA wants Brussels to study
The EBA recommended that the Commission carry out a cost-benefit analysis of two legislative options. The first would add intermediating crypto borrowing and lending to the list of services regulated under MiCA. That would bring the activity into the licence held by crypto-asset service providers (CASPs), the authorised exchanges, brokers and custodians that serve clients in the EU.
The second option would set separate requirements for CASPs that help clients reach DeFi lending protocols, either through an interface or through products that pass DeFi exposure on to customers. DeFi protocols are applications that run on blockchain-based smart contracts and allow users to lend or borrow without a traditional intermediary.
Measures listed for study include suitability tests for users, leverage limits, stronger pre-contractual disclosures and additional disclosures where the destination is a DeFi protocol. The EBA also raised lending limits that involve MiCA-authorised stablecoins and a certification regime for DeFi lending protocols that EU firms would be allowed to connect to.
The proposals are aimed at the regulated firm that originates a loan, routes a client or packages protocol exposure as a product. They do not seek to license smart contracts themselves.
Why crypto lending sits outside MiCA today
MiCA left lending out by design. Recital 94 of the regulation states that it should not address the lending and borrowing of crypto-assets, including e-money tokens, and should not affect national law on those activities. Article 142 instead asked the Commission to assess whether regulating crypto lending and borrowing is feasible and necessary.
The European Securities and Markets Authority (ESMA), the EU’s markets regulator, restated that position on 18 June 2026 in Q&A 2883. ESMA said CASPs may offer lending as an unregulated service but remain bound by their general MiCA duties, including acting honestly, fairly and professionally and keeping marketing fair, clear and not misleading.
It added that MiCA safeguarding arrangements do not apply to assets placed in lending programmes, that clients must give prior, express and specific consent before their crypto-assets are lent, and that lending revenue should accrue to the client apart from a fair fee. ESMA also pointed firms to its July 2025 statement on crypto-asset service providers offering unregulated services.
How far crypto lending has spread in the EU
A joint report by the EBA and ESMA, published on 16 January 2025, found crypto borrowing and lending being intermediated in at least 16 member states. That report also found limited engagement by EU consumers based on the evidence available, and identified no current financial stability risk. It listed risks including excessive leverage, information gaps for users, and the reuse of collateral across chains of transactions.
In its new response, the EBA says volumes and values have continued to grow in both intermediated and DeFi lending, including lending that uses stablecoins.
The stablecoin interest ban and lending yields
MiCA defines two main types of stablecoin. An e-money token (EMT) references a single official currency, such as the euro or the US dollar. An asset-referenced token (ART) references another value, right, or a combination of assets. Articles 40 and 50 of MiCA bar issuers and CASPs from paying interest to holders of ARTs and EMTs.
According to the EBA, two tokens dominate crypto credit markets relative to their market capitalisation. One is an EMT issued by an authorised electronic money institution. The other meets the EMT definition but cannot be offered to the public or traded in the EU because its issuer has not obtained MiCA authorisation. The EBA said lending such tokens can generate returns that resemble interest, and flagged the structure as a regulatory arbitrage risk.
Offshore multi-issuer stablecoins
The EBA said MiCA’s existing requirements for ART and EMT issuers are largely adequate. The exception is third-country multi-issuer schemes, in which an EU entity and a non-EU entity issue the same interchangeable token while reserves are split across jurisdictions.
The EBA said these schemes can pose “significant to very significant” risks. It recommended that, if they remain permitted, they sit under a dedicated regime that includes an equivalence baseline for access to the EU market and additional crisis-management powers for EU supervisors. The European Systemic Risk Board (ESRB), which monitors risks across the EU financial system, addressed the same structures in a recommendation of 25 September 2025.
The EBA’s figures show the uneven state of the market. As of 1 September 2026, it counted 39 EMTs issued under MiCA and no authorised ARTs under Title III of the regulation.
Reserve rules and the central bank view
The EBA also wants the Commission to review the minimum share of stablecoin reserves that issuers must hold as bank deposits, while keeping effective risk management in place.
That overlaps with the European System of Central Banks (ESCB), made up of the European Central Bank and the national central banks of all EU member states. In its response published on 22 September 2026, the ESCB asked the Commission to replace MiCA’s fixed 30% and 60% deposit floors with maturity-based buckets. The central banks also want the interest ban kept and extended to lending and staking products that replicate the economics of a deposit.
The two filings approach the same concern from different angles. The ESCB favours widening the ban, while the EBA favours bringing lending inside MiCA so that such products have a supervisor.
What happens next
The Commission opened the consultation on 20 May 2026, and after an extension it closes on 30 September 2026. Under Article 140 of MiCA, the Commission must report on the regulation’s application by 30 June 2027, and that report may be accompanied by a legislative proposal. Any amendment would then require agreement from the European Parliament and the Council of the EU.
The filing places no new obligations on firms. It adds the EU’s banking regulator to a wider debate over how far crypto rules should reach into DeFi, an area where the EU and US have taken different regulatory routes. If the Commission accepts the EBA’s approach, the question will shift from whether crypto credit exists in Europe to which regulated firm is responsible when a loan routed to a protocol fails.
Also Read: UK Banks Complete First Interbank Transfers Using Tokenized Deposits
