Brussels considers bringing DeFi lending and vaults into MiCA

The European Commission on May 20, 2026 launched a targeted consultation to decide whether decentralized finance lending and onchain vaults should be covered by the Markets in Crypto-Assets regulation (MiCA). Regulators flagged that vaults spread lending functions across multiple participants and smart contracts, complicating oversight.

Vaults can route large amounts of capital into onchain credit markets while avoiding a clear legal classification. Responsibilities in many vaults are split among code and distinct roles rather than concentrated in a single company, so it is not always clear which person or entity would fit existing regulatory categories. The Commission asked stakeholders to comment on gaps in MiCA and whether lending and borrowing should be added explicitly to the list of regulated crypto-asset services or addressed through a different approach.

Morpho’s Vault V2 model illustrates the practical challenge. The protocol separates roles into an owner, a curator who sets strategy and risk parameters, an allocator who executes allocations, and a sentinel with powers intended to reduce risk. That division of labour makes it difficult to identify a single provider of a regulated lending service under current rules. Legal advisers say similar vault architectures could fall under MiCA, stablecoin rules or EU fund law depending on how they operate.

Yuriy Brisov, an EU digital assets lawyer and partner at Digital & Analogue Partners, noted that EU law contains no legal category called a vault and that regulators tend to classify structures by their function rather than by label.

Jonathan Galea, a partner at Cahill Gordon & Reindel, cautioned against treating all lending vaults as one category. He pointed out that some vaults channel fragmented liquidity into lending markets while others perform buy-and-sell functions that have different economic effects and may warrant separate treatment.

MiCA currently excludes crypto-asset services provided in a fully decentralized manner, but the regulation can apply where activities are only partially decentralized. Lawyers say decentralization is a spectrum and that a test based solely on how widely control is distributed could favour older protocols over newer projects that have not yet spread governance widely.

Brisov proposed focusing on structural indicators and control when deciding whether to regulate a vault. He suggested assessing whether there is an undertaking or appointed manager, whether token holders have direct coded claims on a pool, and whether users can exit before parameter changes take effect. He and other stakeholders recommended adding lending and borrowing explicitly to the list of regulated services if Brussels decides to include them.

Michael Egorov, founder of Curve Finance, argued that rules for DeFi lending should differ from rules for traditional finance, saying DeFi may not need some conventional safeguards while requiring others.

The consultation closes on Sept. 30, 2026. Responses will inform whether lending vaults remain outside MiCA, are brought into MiCA by amendment, or are covered by a new regulatory approach designed to distinguish different forms of onchain lending and the parties that control them.