European Union reviews crypto lending regulations under MiCA

The European Commission is taking a long, hard look at crypto lending, and the results could reshape how DeFi operates across 27 member states. On May 20, 2026, the Commission’s DG FISMA launched a targeted consultation to review the Markets in Crypto-Assets Regulation, better known as MiCA. The central question: should lending and borrowing of crypto assets be pulled under regulatory oversight? Responses are due by August 31, 2026. The consultation is part of a mandatory review process baked into MiCA itself when it was adopted on May 31, 2023. Articles 140 and 142 of the regulation required an interim report by June 2025 and a full assessment by June 2027. What MiCA covers, and what it doesn’t MiCA was designed primarily to regulate issuers, token offerings, and crypto-asset service providers, or CASPs. DeFi, staking, and crypto lending were intentionally left outside its scope. Question 67 of the consultation document specifically asks whether lending and borrowing of crypto assets should be regulated, and if so, what detailed requirements should apply. The DeFi problem Fully decentralized DeFi lending vaults operate solely through smart contracts. There is no identifiable count...