EBA Recommends Regulating Crypto Lending and DeFi Under MiCA

The European Banking Authority (EBA) has recommended that the European Commission bring crypto borrowing and lending under the MiCA regulatory framework. The EBA noted that current rules do not cover these activities and warned of regulatory arbitrage risks. The regulator proposed potential measures including leverage caps, suitability tests, and a certification regime for DeFi lending protocols to assess cyber resilience. The EBA also suggested that crypto-asset service providers (CASPs) should face stricter requirements when facilitating access to DeFi protocols.