EBA Floats Stablecoin Lending Restrictions for EU Crypto Firms

The European Banking Authority has proposed that EU policymakers look into imposing restrictions on stablecoin lending by crypto firms. The regulator flagged decentralized finance entry points as a particular area for regulatory scrutiny, urging examination of rules governing so-called DeFi gateways. Among the potential measures the EBA outlined are limits on leverage that could be applied to lending activity involving stablecoins. Another option it raised is requiring formal certification for lending protocols used by crypto firms, which would introduce a compliance or approval process for those platforms. The proposal frames these steps as ways to bring additional oversight to lending practices that involve stablecoins and DeFi infrastructure. By targeting gateways and protocol certification, the EBA’s suggestions focus on both the points of user access and the underlying software that facilitates lending. The regulator presented these ideas as options for the EU to consider; the suggestion does not itself create new rules. Further legislative or regulatory action by EU institutions would be required to convert the EBA’s recommendations into binding requirements.