The European Banking Authority (EBA) has formally requested that the European Commission assess how the Markets in Crypto-Assets (MiCA) framework should treat firms that give customers entry to decentralized finance (DeFi) loans. The request, submitted on 24 September, initiates a consultation that will close at the end of the month.
EBA’s request to the Commission
The EBA’s brief asks the Commission to conduct a cost-benefit analysis of introducing duties for crypto-asset service providers (CASPs) that act as intermediaries for borrowing and lending on DeFi protocols. The regulator highlights consumer-risk concerns, noting that many retail participants may lack sufficient information about fees, yields, collateral requirements or leverage.
Proposed amendments to MiCA
Two possible routes are outlined. The first would expand MiCA’s catalogue of CASP services to explicitly include intermediated crypto borrowing and lending. The second would create a set of obligations for firms that merely facilitate access to DeFi lending protocols, whether through a user-interface, an app or a product that offers exposure to such services. Direct interaction with a smart contract – where a user connects straight to the protocol without an intermediary – remains outside the current scope and would need separate treatment.
Suggested consumer safeguards
The EBA proposes six safeguards for the Commission’s consideration. These include suitability assessments to determine whether a client should engage in borrowing, caps on leverage, enhanced disclosure of fees and risks, and warnings that fully decentralized protocols lack regulatory protection. The regulator also floated the idea of certifying lending protocols for resilience against cyber-attacks. Additionally, the EBA suggested that CASPs could be barred from handling assets that fall under MiCA’s definition of asset-referenced or e-money tokens unless the token issuer holds the required authorization.
Industry examples and practical implications
Guides from MetaMask and Aave illustrate how users can reach DeFi lending pools via an app, a dedicated interface, or direct contract calls. While these guides demonstrate multiple access routes, they do not clarify how EU-based users would be classified under any future CASP rule. Depending on the eventual regulatory design, an app that connects a user to a protocol could face checks or mandatory warnings, whereas the protocol itself would continue operating on-chain.
Timeline and next steps
The Commission’s targeted consultation ends on 30 September at 23:59 CET. Feedback collected during this period will shape the Commission’s report on MiCA’s application to crypto-market developments. If the analysis deems it necessary, the Commission may follow the report with a legislative proposal, though no new rule is in force yet.
Why it matters
Clarifying the regulatory status of services that bridge retail users to DeFi lending could create a clearer compliance landscape for fintech firms and reduce exposure to hidden risks for consumers. The outcome will influence how European users access on-chain credit, potentially setting a precedent for other jurisdictions grappling with the intersection of traditional finance oversight and decentralized protocols.
