MiCA targets DeFi vault, but compliance implementation is difficult

EU regulators assess regulatory framework for crypto lending and DeFi

European regulators are weighing whether some crypto lending and decentralized finance (DeFi) activities should be brought under the same regulatory scope as traditional crypto activities. In a targeted consultation on the framework review of the Crypto Asset Markets Act (MiCA), the European Commission specifically pointed out that DeFi and crypto lending activities were areas not covered by the original rulebook.

Discussions around "lending coffers" may heat up further. These on-chain structures can channel large pools of assets into credit markets while circumventing many of the characteristics of traditional lenders. Stakeholders say their legal status often relies on non-binding interpretations, arguing that these structures may not be subject to MiCA and some EU funds rules, leaving important questions about who should really be held accountable and what should be regulated.

Core Points

In its MiCA review consultation, the European Commission invited stakeholders to respond to gaps that were not fully covered when originally drafted, including DeFi and crypto lending/borrowing. Lending vaults remain difficult to classify because they can decentralize roles between smart contracts and multiple participants rather than operating through a single, clearly identifiable service provider. Legal experts believe that regulators should avoid classifying "DeFi lending" into a single category because different vault designs may have completely different economic functions and control dynamics. Several points in the consultation discussions emphasized that criteria based on structure and control should be used to determine whether regulation should apply, rather than broad "decentralized" tests. If lending is explicitly included in MiCA's regulatory services, industry participants need to clarify compliance expectations that are consistent with the way the treasury system actually operates.

Brussels re-examines MiCA's regulatory gaps in lending and DeFi

On May 20, 2026, the European Commission launched a targeted consultation to solicit stakeholder opinions on areas not fully covered by the original MiCA framework. According to the committee's consultation document, topics include issues such as decentralized finance, crypto lending and borrowing. The practical significance of this step is that MiCA aims to unify rules for crypto asset services across the EU, but does not explicitly address the question of how and whether each lending model-especially those based on on-chain components-fits into existing regulatory categories.

As far as lending coffers are concerned, the current uncertainty is not just academic. Treasury can channel liquidity into lending markets while using multi-party governance or modular contract logic to separate economic functions from operational roles. As a result, its regulatory classification may ultimately rely on informal interpretations and lawyer-led "functional" analysis-an approach many believe lacks sufficient predictability.

Why vault design complicates regulation

One reason regulators may face difficulties is that "vault" does not have a universally recognized legal classification. As Yuri Brissov, an EU digital assets lawyer and partner at Digital & Analog Partners, said, EU law does not define "treasury" as an independent concept; instead, lawyers analyze its functions and how it is controlled to determine how the structure should be treated. This is important because vaults can perform economic functions similar to borrowing while decentralizing activities among smart contracts and different roles. Brissov's view is that "labeling" is not as important as functionality and governance/control models-especially when the structure seems very different from traditional lending entities.

The protocol design provides an example of why it is difficult to correspond existing legal categories to it. Morpho's lending infrastructure describes a Vault V2 setup that divides responsibilities among owners, curators, configurators, and sentries. The curator configures policies and risk parameters, the configurator performs the configuration, and the sentry role is designed to reduce risks. Although this architecture does not in itself constitute a regulated lending service under MiCA, it illustrates that the responsibilities of "service providers" may not be concentrated on a single entity.

In addition, a client update cited in the discussion by Jonathan Galea of Cahill Gordon & Reindel noted that lending vaults may involve multiple regulatory areas. The analysis pointed out that the treasury structure may involve both MiCA, stablecoin-related rules and EU funds rules-again emphasizing that treasury cannot be understood through a single regulatory perspective alone.

Be wary of "one size fits all" DeFi lending regulation

In addition to classification mechanisms, stakeholders also seem to be concerned about how any future rules may be constructed. Based on the updates cited, Galea's view is that policymakers should be cautious about treating lending vaults as a single category. In his view, lending vaults "solve more problems than they create," but they are not uniform: some vaults may channel liquidity to lending markets, while others may buy and sell crypto assets and need to be treated differently. Gallia believes that the core risk is that broad regulation could put essentially different economic activities under the same label. If "DeFi Lending" were brought under regulation as a single category, structures with different roles and functions could face the same compliance requirements-even though they were designed for different outcomes.

This is not just a technical detail. In practice, regulatory uncertainty affects how developers design protocols and how users assess risk. If it fails to distinguish between operations like lending and operations like asset trading, such frameworks either overregulate certain systems or leave out activities that truly require stricter supervision.

What standards should treasury based lending be regulated?

MiCA already includes an important exemption clause: crypto asset services provided in a "fully decentralized manner" are excluded, and MiCA may still apply when only part of the activity is decentralized. But even this concept can be controversial for treasury systems, as decentralization can be partial or evolve over time. Gallia warned that using decentralization as a dividing line could punish newer agreements. In his view, decentralization is a spectrum, a function of time; testing relying on it could consolidate existing projects that have been decentralizing control over years.

Brissov emphasized structural facts and user opt-out rights. He believes that the "safer basis" is structural rather than rhetorical: whether there is a business or designated manager, whether token or creditor holders have direct encoded claims on the pool, and whether users can exit before parameter changes take effect. He also believes that if lending and borrowing are to be regulated, Brussels should explicitly include them in the list of regulated crypto asset services, rather than expanding the definition of crypto asset service providers themselves. This distinction is important because it determines how narrowly or broadly compliance obligations will be interpreted.

Michael Egorov, founder of Curve Finance, added another perspective: If DeFi lending is regulated, he believes it should be treated "completely different" from traditional lending. Egorov's position is that DeFi may not need some of the safeguards inherent in traditional lending, but may also need other safeguards that are more appropriate to the on-chain market structure. He suggested that a dedicated framework could improve security and accessibility for new users while avoiding certain rules that protocols cannot follow because of the way they are built.

The committee's consultation on how to develop next steps after the consultation is completed is scheduled to end on September 30. The next developments will determine whether lending vaults will remain outside the scope of MiCA's regulation, or whether regulators will develop a clear and specialized framework for crypto lending and borrowing. For participants in DeFi and crypto lending, the key uncertainty is not just whether regulation will come, but also how Brussels will draw the line between different vault designs and the roles of the parties behind them. As the EU reviews and consultancies respond, builders and users should pay attention to the standard signals regulators intend to adopt-particularly regarding structural controls, allocation of responsibilities, and how user opt-out rights and economic functions map to any future obligations.