Brussels is reviewing whether crypto lending should fall under MiCA, but DeFi lending vaults are making it harder to determine who, exactly, should be regulated.
MiCA left crypto lending outside its original rulebook — but now Brussels is considering whether to bring it in.
On May 20, 2026, the European Commission asked stakeholders to weigh in on areas left outside the original Markets in Crypto Assets (MiCA) framework. These include issues around decentralized finance (DeFi) and crypto lending and borrowing.
One area of contention involves lending vaults, which can channel billions of dollars into onchain credit markets without looking like conventional lending. Their legal status currently depends on non binding interpretations that they fall outside of MiCA and EU fund rules.
Yuriy Brisov, an EU digital assets lawyer and partner at Digital & Analogue Partners, tells Magazine the law pertaining to vaults at present is unclear:
That’s just one of myriad regulatory problems, since vaults can perform the economic functions of lending while spreading other functions over smart contracts and multiple participants rather than a single company.
If Brussels decides lending should come inside the regulatory perimeter, what does that mean for DeFi, and where does it leave the people and protocols behind these vaults?
Decentralized lending protocol Morpho’s lending infrastructure gives some clues as to why this question will be so hard to answer. The way its vaults are set up and managed does not neatly map on to any existing regulatory model.
Targeted consultation on the review of Regulation on the Markets in Crypto Assets (MiCA). Source: European Comission
Its Vault V2 architecture divides responsibilities between an owner, curator, allocator and sentinel. The curator configures strategy and risk parameters, while the allocator executes allocations and the sentinel has powers intended to reduce risk.
While none of this establishes any of these participants as providing a regulated lending service under MiCA, it does show why identifying the relevant “provider” is less straightforward than with a conventional lender.
Related: Bitwise to launch onchain vaults via Morpho
Jonathan Galea, a partner at Cahill Gordon & Reindel, explored the issue in a recent client update on lending vaults and their position under EU financial regulation. His analysis looks at how vault structures can sit across MiCA, stablecoin rules and European fund law.
Galea says policymakers should be careful about treating lending vaults as a single category, telling Magazine, “lending vaults solve more practical problems than they create.”
He says lending vaults help direct fragmented liquidity into lending markets, while other vaults may buy and sell crypto assets and should be treated differently:
