The European Banking Authority (EBA) has issued its response to the European Commission’s (EC) MiCA targeted consultation. The consultation seeks to collect the views of the stakeholders on all the market developments not originally covered by MiCA and whether policy or regulatory action would be warranted while also taking stock of whether MiCA is fit for the future in the rapidly evolving landscape of digital and tokenised asset markets.
In its response, the EBA is recommending that the EC should prioritise specific issues.
It considers the existing requirements for issuers of asset-referenced tokens (ARTs) and electronic money tokens (EMTs) generally suitable. However, it recommends strengthening the framework for stablecoin arrangements involving issuers established both within and outside the EU.
The EC’s consultation identifies particular concerns with these multi-issuer arrangements, including the movement of tokens into the EU during periods of market stress, increasing redemption demands on EU issuers. Reserves may be distributed across different jurisdictions, while restrictions on their transfer may affect the ability to meet those demands. In its response, the EBA recommends that, should these arrangements be permissible, they should be subject to a dedicated regulatory and supervisory regime. Measures for consideration include an equivalence regime for third countries, closer supervisory cooperation and additional powers to manage crises.
Reserve requirements are another area identified for review. The EBA recommends a cost-benefit assessment of reducing the minimum proportion held as bank deposits, recognising the potential transmission of liquidity difficulties between issuers and banks. Any reduction would require other permitted reserve assets to remain sufficiently liquid and of sufficiently high quality to meet redemption requests.
The EBA is also calling for clarification of MiCA’s scope and definitions, observing that classification difficulties create costs and delay product launches. The consultation recognises that crypto-assets qualifying as financial instruments or deposits fall outside MiCA and are governed by other financial services legislation. It supports retaining this exclusion for tokenised financial instruments and calls for greater harmonisation of the definition of ‘financial instrument’, given that the term is not fully harmonised by EU law.
Beyond MiCA’s existing scope, the EBA recommends regulating crypto-asset lending, including where crypto-asset service providers (CASPs) facilitate access to decentralised finance (DeFi) lending protocols. These concerns follow the EBA and ESMA’s January 2025 analysis of lending, borrowing and staking, which highlighted risks including excessive leverage and inadequate information for users. In particular, the authorities identified shortcomings in disclosures concerning fees, yields and changes to collateral requirements.
The EBA now proposes assessing the inclusion of intermediated borrowing and lending within MiCA’s regulated services. Potential safeguards include suitability tests, leverage limits and risk disclosures, with additional warnings where CASPs facilitate access to unregulated DeFi activities. Its response also supports stronger oversight of groups combining crypto-asset services with other activities, including through consolidated supervision and structured supervisory cooperation.
In its response the EBA also addressed the interplay between MiCA and the proposed third Payment Services Directive (PSD3) and Payment Services Regulation (PSR). Based on the draft compromise texts, it welcomes the additional clarity but notes that dual authorisation would remain for CASPs providing payment services involving EMTs. It also identifies a potential regulatory asymmetry, whereby payment institutions could provide certain EMT-related crypto-asset services through a notification procedure, while CASPs would generally require separate payment services authorisation.
The EBA recommends avoiding this difference or clarifying its rationale and scope. It further seeks clarification of the treatment of client funds held by firms authorised under both frameworks, particularly to address the risk that funds received for crypto-asset services which do not constitute payment services could fall outside both safeguarding regimes.
Finally, the EBA recommends reviewing reporting requirements for issuers and CASPs to improve supervision and the monitoring of risks. It calls for a coherent framework, with proportionate obligations reflecting the scale of activities.
The wider consultation also addresses matters such as non-fungible tokens (NFTs), prediction markets, tokenised deposits and the legal treatment of tokens. Alongside these questions, the EC is considering whether requirements can be simplified or administrative burdens reduced. The consultation responses will inform the EC’s report mandated under MiCA which may, where considered appropriate, be accompanied by a legislative proposal to amend and complement the Regulation – this is colloquially being referred to as MiCA 2.0.
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Author: Dr Cherise Abela Grech