EU Reviews MiCA: Stablecoin Interest Rules and DeFi Gaps on the Table

The European Commission launched a public consultation on a possible update to MiCA, the EU crypto regulation that took effect in 2024. The consultation runs until August 31, 2026. Topics on the table include stablecoin interest rules, DeFi coverage, and how tokenized assets should be classified.

What Is MiCA and Why Is It Being Reviewed?

The Markets in Crypto-Assets Regulation was the first broad EU law to cover crypto service providers under a single legal framework, including stablecoin issuers, exchanges, and custodians. Before it came into force, each EU member state applied its own rules to digital assets. Since 2024, those rules have been unified across all 27 countries.

The push for a review is not about the law failing. The Commission acknowledges that crypto markets "have continued to evolve" and that the global regulatory environment has shifted. The US is advancing its own crypto legislation. The UK is shaping a separate stablecoin regime. The DeFi sector grew to a scale that MiCA's authors did not anticipate in 2022 or 2023.

Some in the industry have already labeled potential amendments "MiCA 2." The Commission does not use that phrase officially but says the current framework needs to be checked for whether it remains "fit for purpose."

What Does the Consultation Cover?

The Commission prepared a detailed questionnaire for market participants and the general public. Responses are expected from exchanges, token issuers, researchers, and retail users.

• Asset classification: where the line falls between crypto assets and traditional financial instruments. Wrapped tokens, synthetic assets, and tokenized fund interests still land in a legal "gray zone."
• Stablecoins: whether the ban on paying interest remains justified, what reserve requirements should look like, and how redemption rights should work.
• DeFi and staking: whether a separate framework is needed for decentralized protocols that fall outside MiCA because they lack a single licensable operator.
• NFTs and crypto lending: how to classify and oversee these markets, which grew rapidly after the law was passed.
• Consumer protection: whether ordinary users understand the difference between Bitcoin, stablecoins, and tokenized assets.

Will the Stablecoin Interest Ban Be Dropped?

One of the most debated provisions of MiCA is the direct prohibition on stablecoin issuers paying holders any form of interest or yield-like return. The Commission is now formally asking whether that ban should stay.

Critics of the rule argue that stablecoins in the EU cannot compete with bank deposits or dollar money market funds. Assets like USDT and USDC are barred from passing on the returns from their reserves to users. While US and Asian providers offer yield products, the EU stablecoin market remains tightly restricted.

The consultation also asks about reserve requirements: which assets qualify, what liquidity levels are needed for timely redemptions, and how thresholds for "significant" tokens should be recalculated.

DeFi and Tokenized Assets: Where Does MiCA End?

The most significant gap in MiCA is the near-total exclusion of decentralized finance protocols from its scope. Protocols like Uniswap or Aave do not fall under the rules because they have no single "operator" to license. The consultation directly asks whether this gap should be closed.

A similar issue applies to tokenized financial assets: stocks, bonds, and funds on a blockchain. In the EU, those fall under separate securities law rather than MiCA. The overlap creates a complicated interaction between two legal frameworks, and regulators want to sort it out.

For the first time, the Commission also gathered feedback directly from ordinary consumers. The questions are straightforward: what would increase their confidence in regulated crypto services, and how do they currently assess the protection of their funds.

What Does the Timeline Look Like?

The consultation does not pause the process already underway. All crypto asset service providers in the EU face a July 2026 deadline: get fully authorized under MiCA or shut down. Any amendments resulting from this consultation will go through a separate legislative process and take at least several years to reach law.

For users who buy or sell Ethereum or stablecoins through a regulated exchange in the EU, the current rules stay unchanged. Compliance obligations fall on providers, not individual customers. If the stablecoin interest ban is eventually lifted, though, holders of these assets will be able to earn returns directly without routing funds through DeFi.