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Recent developments signal that the regulatory treatment of cryptoasset lending may be shifting.

By Gabriel Lakeman, Axel Schiemann, Thomas Vogel, and Ivan Pizeta

Key Points:

  • ESMA has released a Q&A which confirms ESMA’s views that MiCA does not regulate cryptoasset lending and borrowing as specific cryptoasset activities, but that general MiCA obligations do apply to CASPs providing these services.
  • This Q&A is released in the context of increasing regulatory attention to cryptoasset lending and borrowing, including the European Commission’s targeted consultation on MiCA which includes questions on how cryptoasset lending should be regulated, and which is open for comments until 31 August 2026.
  • Firms should therefore ensure that their cryptoasset lending and borrowing activity is in line with ESMA’s expectations and should continue to evaluate what regulatory requirements apply to the activity as the EU regulatory framework evolves.

Cryptoasset lending currently sits outside the scope of the European Union’s cryptoasset regime. That gap in regulation sits against a backdrop of rapid growth with increasing lending and borrowing use cases in the digital asset market, and decentralised lending protocols attracting particular substantial user activity — a trend that helps explain why EU regulators are increasingly turning their attention to cryptoasset lending. While the Markets in Crypto-Assets Regulation (MiCA)1 establishes a comprehensive, harmonised framework for issuing cryptoassets and providing cryptoasset services, it explicitly leaves the lending and borrowing of cryptoassets outside the regulated perimeter. A recent question and answer (Q&A 2883) published by the European Securities and Markets Authority (ESMA) clarifies how existing MiCA obligations continue to apply on cryptoasset service providers (CASPs) that offer lending, and the European Commission’s targeted consultation (Consultation) asks whether such activity should be regulated. The Consultation remains open for comments until 31 August 2026. Together, these developments signal that the regulatory treatment of cryptoasset lending may be entering a period of change.

The MiCA Position

MiCA serves as the central EU regulatory framework governing cryptoasset issuers and CASPs. It lays down uniform requirements for offers to the public and admission to trading of cryptoassets, together with an authorisation and conduct regime for CASPs providing  services in relation to cryptoassets. This covers custody and administration, operation of a trading platform, exchange of cryptoassets for funds or other cryptoassets, execution of orders, reception and transmission of orders, transfer services, placing, advice and portfolio management.

Cryptoasset lending is conspicuously absent from that list. Rather, Recital 94 of MiCA states that MiCA “should not address the lending and borrowing of cryptoassets, including e-money tokens, and therefore should not prejudice applicable national law”, adding that “[t]he feasibility and necessity of regulating such activities should be further assessed”. The effect is that cryptoasset lending is not, per se, a regulated cryptoasset service under MiCA. Its treatment is left to applicable national law, which varies across Member States, and to the future assessment that MiCA itself contemplates.

That approach is reinforced by Article 142 of MiCA, which mandates the Commission to report on developments not addressed by MiCA, expressly including “an assessment of the necessity and feasibility of regulating lending and borrowing of cryptoassets”. For market participants, the practical consequence is regulatory uncertainty: cryptoasset lending can be offered without a MiCA authorisation specific to that activity, yet i how requirements attaching to other MiCA services would apply in a lending context remains unclear. Moreover, MiCA does not provide a settled, EU-wide answer as to how the activity will ultimately be treated.

ESMA’s Q&A

ESMA’s Q&A, published on 18 June 2026, addresses whether CASPs may offer cryptoasset lending services under MiCA and, if so, on what conditions, particularly with respect to the use of clients’ cryptoassets. ESMA’s response confirms that MiCA does not address the lending and borrowing of cryptoassets, however, it clarifies that CASPs offering lending alongside other regulated cryptoasset services do not escape MiCA and remain subject to their general obligations under the regulation.

ESMA identifies those obligations by reference to specific MiCA provisions:

  • The duty to act honestly, fairly, and professionally in the best interests of clients (Article 66(1) of MiCA);
  • The duty to ensure that all communications, including marketing communications, are fair, clear, and not misleading (Article 66(2) of MiCA);
  • The duty to safeguard clients’ ownership rights and to refrain from using clients’ cryptoassets for the CASP’s own account (Article 70(1) of MiCA), which means that any use of clients’ cryptoassets for lending requires prior express and specific consent, limited to clearly defined terms.

ESMA also draws out specific requirements that it views as applicable in a cryptoasset lending context, i.e., when a client transfers a cryptoasset to a CASP (or other party) with a right to return, typically in response to an additional benefit (such as a yield). In particular, the Q&A states that:

  • Disclosures: CASPs must disclose, in a fair, clear, and non-misleading way, the significant risks inherent in cryptoasset lending — counterparty risk, collateral shortfall risk, and the risk of losing access to lent cryptoassets should the CASP fail — and must make clear that MiCA’s safeguarding arrangements do not apply to assets committed to lending programmes. Consistent with ESMA’s Avoiding Misperceptions Statement, CASPs must also clearly disclose if the lending service itself is unregulated under MiCA, and avoid confusing clients when the lending service is offered alongside regulated services.
  • Collateral adequacy and protocol robustness: CASPs should ensure adequate collateral and assess the robustness of the relevant lending arrangements or protocols, including decentralised ones; however, the Q&A does not provide guidance on the required standard of diligence.
  • Revenue: of particular significance is ESMA’s treatment of the economics of lending. ESMA indicates that revenues generated from lending should accrue to the client, who bears the associated risks bar a fair and proportionate fee reflecting operational costs. Retaining any additional revenue would, in ESMA’s view, be inconsistent with the duty to act in the client’s best interests. Read across from MiCA’s best-interests obligation, it operates as a substantive constraint on the CASP business model — rather than retaining the spread between what a borrower pays and what a lending client receives, ESMA’s Q&A suggests that a CASP may recover only a cost-based fee.

ESMA also notes that, without prejudice to case-by-case classification, certain lending arrangements could, depending on their features, fall within other EU or national frameworks, such as the Alternative Investment Fund Managers Directive. Notably, however, ESMA does not go further, i.e., it does not address whether cryptoasset lending might engage EU collective investment undertaking or national consumer credit regime. The Q&A therefore clarifies the conduct obligations that apply and impose specific constraints on cryptoasset lending, but stops short of resolving the more fundamental question of which regulatory regime ultimately governs both lending and borrowing activity. For that reason, it remains advisable to conduct a regulatory analysis of specific lending arrangements to determine whether they fall under other EU or national regimes, irrespective of MiCA’s scope.

The MiCA Consultation Process

Alongside ESMA’s recent Q&A, market participants should be reminded that the European Commission’s Consultation is open for comments until 31 August 2026. The Consultation seeks to evaluate whether MiCA’s regulatory framework continues to be appropriate given recent market, product, and technological developments and targets a specialised audience, including digital asset industry representatives and public authorities such as supervisors, central banks, and ministries of finance. In addition, the Commission published a public Consultation for individuals. Of particular relevance for cryptoasset lending and borrowing is Part 4 of the Consultation, which addresses policy areas beyond the current scope of MiCA, including decentralised finance, staking, and, expressly, the lending and borrowing of cryptoassets. The consultation asks directly whether lending and borrowing of cryptoassets should be regulated and, if so, what the main elements of any regulatory requirements should be.

This suggests that the EU institutions are willing to explore whether cryptoasset lending should be brought within the regulatory perimeter of MiCA, rather than leaving it to national law. The consultation reflects the Commission’s stated ambition to establish a coherent supervisory framework for activities that have so far remained unregulated or only partially addressed. Moreover, it acknowledges that cryptoasset markets have developed significantly amid broader, global policy and regulatory momentum since MiCA was designed. The Commission has been explicit that the outcome of the review may lead to legislative amendments to MiCA and related legislation, however, the question of whether regulation of cryptoasset lending will follow remains open.

Conclusion

For CASPs and other market participants active in cryptoasset lending, several themes emerge. First, regulators are now focused on cryptoasset lending through both ESMA’s Q&A and the Commission’s Consultation. Second, the headline position may look permissive under MiCA as cryptoasset lending remains outside MiCA’s regulated perimeter, and ESMA confirms that CASPs may offer it. Third, that permissiveness is more apparent than real, because ESMA reads across MiCA’s existing principles-based requirements (e.g.,the duties to act in clients’ best interests, to communicate fairly, and to safeguard client assets) so that lending offered alongside regulated services is, in practice, closely constrained. Fourth, the limitation on fees is particularly material, effectively confining CASPs to a cost-based charge. Fifth, and looking further ahead, the live Consultation signals that the “further assessment” contemplated by Recital 94 of MiCA is now underway, and that cryptoasset lending may in time be brought within explicit regulation, though whether and in what form remains uncertain. Firms would be well advised to engage with the Consultation and to keep their lending arrangements under review as the framework evolves.

  1. Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in cryptoassets. ↩︎