EU Regulators Push to Extend Stablecoin Yield Restrictions to Lending and Staking
European regulators are moving toward broader restrictions on crypto products that can generate indirect returns from stablecoins, while the European Banking Authority is urging policymakers to bring crypto lending and DeFi access further inside the EU’s regulatory framework.
The European System of Central Banks has argued that MiCA’s existing prohibition on stablecoin interest should also cover indirect remuneration created through lending, borrowing, staking and similar structures. The proposal comes as regulators review whether crypto platforms can effectively recreate yield products despite the current ban on direct interest.
The EBA separately recommended that the European Commission examine regulation of crypto-asset lending and borrowing, including services that connect customers to decentralized lending protocols. The authority said these activities are expanding across EU member states and can create consumer risks involving leverage, collateral, fees, disclosures and potential losses.
Broader rules for DeFi access
The EBA’s proposal could affect crypto-asset service providers that offer interfaces or products giving customers access to DeFi lending. Regulators are particularly focused on the growing overlap between centralized firms and decentralized protocols.
The EBA has identified several areas for possible safeguards:
- Rules covering intermediated crypto lending and borrowing
- Requirements for firms facilitating access to DeFi lending
- Greater disclosures around yields, collateral and risks
- Potential suitability and leverage controls
- Measures addressing lending involving non-compliant stablecoins
The European Securities and Markets Authority has also called for proportionate requirements covering staking, lending and borrowing, alongside clearer criteria for determining whether a DeFi activity is genuinely decentralized.
MiCA review could reshape crypto services
The proposals do not immediately change EU law. They form part of the ongoing review of MiCA, which regulators are using to assess activities that fall outside the framework.
MiCA currently prohibits issuers and crypto service providers from granting interest on e-money tokens. The rules also treat certain remuneration linked to the holding period as interest.
The Commission’s review could therefore determine how regulators treat stablecoin lending, staking and DeFi access in the future. For crypto businesses, the key issue will be whether new requirements apply only to intermediaries or also reach products and structures designed to provide indirect stablecoin yields.
