On September 24, 2026, the European Banking Authority published its formal position regarding the European Commission’s targeted consultation on MiCA, calling for crypto asset borrowing and lending activities to be brought directly under the European Union’s harmonized supervisory regime.
The regulatory recommendation addresses expanding credit operations across the internal market. According to supervisory research referenced by the banking watchdog, crypto borrowing and credit facilities currently operate across at least 16 EU member states, highlighting the need for common standards throughout the European bloc.
The banking watchdog advised the European Commission to perform a cost-benefit assessment on potential legislative amendments. This statutory modification would incorporate crypto credit intermediation into the list of regulated services under MiCA, introducing mandatory compliance parameters, operational requirements, and continuous institutional supervision.
Proposed requirements for intermediaries and protocols
The supervisory authority suggested establishing mandatory suitability tests for retail users prior to entering credit contracts. The proposal also focuses on enforcing binding leverage limits and applying expanded disclosure mandates covering margin maintenance, collateral liquidation policies, and direct counterparty risks.
Regulatory scrutiny would additionally cover centralized crypto-asset service providers that intermediate client connections to decentralized lending markets. The banking authority emphasized that automated algorithms and artificial intelligence interfaces increasingly blur operational boundaries between custodial platforms and decentralized financial infrastructure.
To mitigate non-custodial vulnerabilities, the watchdog proposed a certification regime for DeFi lending protocols integrated into regulated client services. Regulators also recommended prohibiting loan transactions backed by asset-referenced or e-money tokens that lack official authorization under MiCA Title III or IV provisions.
Stablecoin reserve scrutiny and multi-issuer risks
The supervisory recommendations also re-evaluate reserve guidelines, addressing operational challenges linked to oversight on stablecoin issuers across the continent. Specifically, the regulator suggested reviewing rules that dictate holding a statutory portion of reserves exclusively in commercial bank cash deposits.
The agency highlighted material stability risks created by cross-border, multi-issuer stablecoin networks originating from third countries. To counter these systemic threats, the watchdog urged European lawmakers to impose stricter prudential requirements and comprehensive balance-sheet controls on foreign issuer entities targeting EU consumers.
Official market metrics published by the banking authority indicate that, as of September 1, 2026, 39 electronic money tokens held authorization under MiCA. In contrast, zero asset-referenced tokens had secured full regulatory authorization across member state jurisdictions by that reporting date.
Operational frictions across European markets
Stringent governance and capitalization standards previously triggered structural reorganizations and the departure of major exchange platforms from select regional jurisdictions. Expanding legal scope to crypto lending will demand additional administrative infrastructure, reporting pipelines, and internal controls from regulated brokerage houses.
Furthermore, the banking authority observed persistent difficulties regarding asset classification across national regulators. These regulatory divergences produce unnecessary compliance expenditures, delay product deployment, and impede fair competition across member states within the European Single Market.
To address statutory inconsistencies, the regulator urged lawmakers to refine definitions in primary legislation. Clarifying legal boundaries between MiCA and existing directives, notably the Markets in Financial Instruments Directive, remains a core supervisory priority for the proposed legislative update.
Next legislative steps for European regulators
The regulatory framework applied stablecoin provisions on June 30, 2024, followed by comprehensive service provider mandates on December 30, 2024. Incorporating borrowing and lending operations will require the European Commission to prepare a formal legislative review package.
The European Commission will assess the banking authority’s recommendations before presenting any draft amendments to the European Parliament and Council. The EBA confirmed it will continue monitoring decentralized finance and lending markets throughout 2027 to ensure supervisory convergence.
This article is for informational purposes only and does not constitute financial advice.
