Aave Takes Aim at MiCA's Intermediary Gap Aave Labs has submitted formal recommendations to the European Commission as part of its ongoing review of the Markets in Crypto-Assets Regulation (M
Aave Labs has submitted formal recommendations to the European Commission as part of its ongoing review of the Markets in Crypto-Assets Regulation (MiCA). The protocol is pushing for a regulatory approach that focuses on intermediaries rather than open-source financial software, a distinction it argues is essential to preserving the integrity of decentralised finance.
The submission feeds into a targeted consultation the Commission launched in May 2026 to examine whether MiCA remains fit for purpose. The review covers stablecoin rules, DeFi, staking and lending, with a Commission report to the European Parliament due by June 2027.
Aave argues that MiCA was designed for an earlier generation of the crypto market, one dominated by centralised issuers and custodians. It believes Europe now has an opportunity to modernise the framework to reflect newer financial infrastructure built on open, permissionless protocols.
Among its specific requests, Aave is calling for stronger protections for self-custody and for the preservation of lending returns under euro stablecoins. The protocol also wants euro stablecoins to be given room to compete globally, which it says will require more flexible reserve and liquidity requirements than those currently prescribed under MiCA.
The intervention comes at a busy moment for the review. The European Securities and Markets Authority published its own response on 30 September 2026, proposing targeted amendments covering DeFi, stablecoins, staking, and lending and borrowing. The European Banking Authority has separately recommended that crypto lending and DeFi access be brought further into MiCA's scope, a position that sits in direct tension with Aave's push to keep software itself outside the regulatory perimeter.
Aave's message to Brussels is straightforward: regulate the intermediaries who sit between users and protocols, not the code that powers them. Whether the Commission agrees will shape how DeFi operates across the EU for years to come.
Sources:Coinfomania: Aave Labs Submits Response to European Commission's MiCAESMA: ESMA Calls for Changes to Make MiCA Clearer, Safer and Ready for Emerging ServicesSkadden: Fit for Purpose? European Commission Launches Review of MiCA
