The European Commission has launched a consultation to examine areas left outside the original Markets in Crypto Assets (MiCA) framework, including decentralized finance (DeFi) and crypto lending. Stakeholders were asked to weigh in by May 20, 2026, on whether these activities should be brought inside the regulatory perimeter.
A primary point of contention involves lending vaults, which can channel billions of dollars into onchain credit markets. Currently, their legal status relies on non-binding interpretations that place them outside of MiCA and EU fund rules. Yuriy Brisov, an EU digital assets lawyer and partner at Digital & Analogue Partners, noted that EU law lacks a specific category for a vault, requiring regulators to qualify them by function rather than label.
The structural complexity of modern DeFi protocols makes regulation difficult. For example, decentralized lending protocol Morpho's Vault V2 architecture divides responsibilities among an owner, curator, allocator, and sentinel. Jonathan Galea, a partner at Cahill Gordon & Reindel, cautioned policymakers against treating lending vaults as a single category, warning that a broad definition could mistakenly capture structures with entirely different economic functions.
While MiCA currently excludes crypto-asset services provided in a fully decentralized manner, using decentralization as a strict dividing line presents its own issues. Galea argued that a test based on decentralization could penalize newer protocols while favoring mature incumbents. Brisov suggested that the focus should instead be on the structure of the vault and the degree of control individuals hold over it.
Curve Finance founder Michael Egorov added that any future rules must account for the distinct differences between decentralized lending and conventional finance. Egorov stated that DeFi requires different safeguards than traditional lending and should be approached carefully to avoid imposing compliance burdens that protocol architectures cannot support.
The European Commission consultation remains open through Sept. 30, 2026, and will help determine whether lending vaults eventually become subject to a new regulatory framework.
