The European Commission has launched a consultation on revising the Markets in Crypto Assets (MiCA) framework to address gaps in the regulation of crypto lending and borrowing, areas initially excluded from the legislation. The move follows growing concerns over the legal ambiguity surrounding lending vaults, which operate outside traditional financial structures and lack a defined category under EU law.
The consultation, initiated on May 20, 2026, seeks input from stakeholders by September 30 on whether to bring decentralised lending mechanisms under MiCA’s oversight. Legal experts highlight challenges in classifying vaults, which channel billions into onchain credit markets through structures such as Morpho’s Vault V2, where responsibilities are divided among owner, curator, allocator, and sentinel.
Yuriy Brisov, an EU digital assets lawyer, noted that EU law contains no formal definition for “vaults,” leaving regulators to interpret their function rather than their label. Meanwhile, Jonathan Galea of Cahill Gordon & Reindel argued that lending vaults address practical issues in decentralised finance (DeFi) without creating new risks.
Michael Egorov of Curve Finance urged regulators to treat DeFi lending differently from traditional models, warning that a one-size-fits-all approach could stifle innovation. The debate centres on whether decentralisation should dictate regulatory boundaries, with concerns that newer protocols may face unfair disadvantages if rules are not tailored to their structure.
Uncertainty remains over whether DeFi lending should be regulated as a unified category or treated separately due to its structural differences. Experts have yet to reach consensus on whether existing financial safeguards should apply or if novel measures are required to balance innovation and consumer protection.
Written by Steven Cook
Regulation Desk
