The European Banking Authority (EBA) has recommended that the European Commission consider incorporating crypto lending into the Markets in Crypto-Assets (MiCA) regulation as part of the ongoing review of the EU’s digital asset framework. The recommendations, open for consultation until September 30, aim to address evolving risks and clarify regulatory boundaries.
According to the EBA, the crypto lending sector, including services that connect users to decentralized lending protocols, can pose risks to consumers not fully addressed under the existing framework. The authority has urged the European Commission to review and potentially expand MiCA’s scope to encompass these activities.
Beyond crypto lending, the EBA called for stronger rules concerning third-country stablecoin arrangements. While the EBA considers existing requirements for asset referenced tokens and electronic money tokens broadly appropriate, it noted that these structures can create significant risks and may necessitate changes to MiCA. The regulator also suggested a review of reserve requirements for stablecoin issuers, particularly concerning the minimum share of reserves held as bank deposits and effective risk management.
Challenges in crypto asset classification were also highlighted by the EBA. The authority stated that unclear boundaries between MiCA and other EU financial rules can lead to unnecessary costs and delays for companies launching new products. To mitigate this, the EBA recommended clearer definitions and scope for crypto asset classification.
Furthermore, the EBA seeks improvements to the reporting framework for token issuers and crypto service providers to enhance supervision and risk monitoring. These recommendations come as the European Commission conducts a broader review of MiCA to ensure its continued suitability as the crypto market develops.
MiCA entered into full application in December 2024, with its stablecoin provisions taking effect in June 2024. As of September 1, 39 electronic money tokens had been issued under the framework, while no asset referenced tokens had been authorized, according to the EBA.
The European Commission’s targeted consultation on the MiCA review remains open through September 30, and the outcomes could lead to legislative changes impacting the crypto industry within the European Union.
Why This Matters
The materials describe a narrow update: The EBA has urged the European Commission to review and potentially expand the scope of the MiCA regulation to encompass crypto lending, including services that connect users to decentralized lending protocols. Whether the European Commission will adopt the EBA’s recommendation to include crypto lending under MiCA.
Broader Context
Source materials place the factual news in this context: The European Banking Authority has urged the European Commission to consider bringing crypto lending under MiCA as part of its review of the European Union’s digital asset regulatory framework.
