Tag: European Commission

  • EU Regulators Push for DeFi Lending Safeguards Ahead of September 30 MiCA Deadline

    EU Regulators Push for DeFi Lending Safeguards Ahead of September 30 MiCA Deadline

    The European Commission is set to close its targeted consultation on the Markets in Crypto-Assets Regulation (MiCA) on September 30, with banking regulators urging a closer look at decentralized finance (DeFi) lending and borrowing.

    The deadline is for feedback on possible changes to the EU crypto framework. It does not itself impose new lending requirements.

    EBA seeks review of DeFi loan access

    In a September 24 response, the European Banking Authority (EBA) asked the Commission to assess rules for firms that arrange crypto loans. The scope would also cover crypto companies that connect customers to DeFi lending through an app or product. In some cases, a loan may run through an automated protocol while a company controls the route customers use to reach it.

    The EBA outlined two potential changes to MiCA:

    • Add crypto lending and borrowing to the list of regulated services.
    • Impose duties on firms that provide access to DeFi lending.

    Before deciding whether to propose legislation, the Commission would need to assess the size of these activities, their retail use and the consumer risks involved.

    Consumer safeguards and risk gaps

    The EBA suggested examining suitability checks, leverage limits and clearer information about lending terms. It also floated warnings for customers using protocols described as “truly decentralized.” Another option would assess whether lending protocols could receive certification for their ability to withstand cyberattacks.

    The authority identified gaps in information about fees, yields and changes to collateral requirements. It raised concerns about losses tied to leverage, outages, hacks and poor recordkeeping. Borrowers may also take on too much debt when services do not check their ability to repay.

    Stablecoin-linked loans draw scrutiny

    A separate EBA proposal concerns loans involving certain stablecoins without an authorized issuer. The EBA said MiCA could bar crypto firms from arranging or facilitating loans involving those tokens. The suggestion focuses on firms providing the service. Lawmakers would still need to decide how any new rules treat customers who interact with smart contracts directly.

    Central banks seek broader rules

    The European System of Central Banks has submitted its own response to the MiCA review. It wants the EU to regulate crypto staking, lending and borrowing. The central banks also want the existing ban on stablecoin interest to cover indirect rewards offered through related services. Their recommendations require further legislative work before they can become binding.

    Access routes complicate the policy question

    The responses leave lawmakers with a practical question. Customers can reach a lending protocol through a company’s app, another interface or a direct smart contract transaction. Any proposal would need to define which firms provide a regulated service and what duties apply to each access route.

    The Commission’s consultation closes on September 30 at 11:59 p.m. Central European Summer Time. Feedback will inform its report on MiCA’s application. The Commission says it may submit a legislative proposal alongside that report if it finds changes are warranted.

  • EU Court Rejects Google’s Final Appeal, Upholds $4.4 Billion Android Antitrust Fine

    EU Court Rejects Google’s Final Appeal, Upholds $4.4 Billion Android Antitrust Fine

    The Court of Justice of the European Union, Europe’s highest court, has dismissed Google’s final appeal against a €4.1 billion ($4.4 billion) antitrust fine, bringing an eight-year legal battle to a definitive close. The ruling confirms that Google abused its dominant market position through agreements tied to its Android mobile operating system.

    The European Commission originally imposed a €4.34 billion penalty in 2018 after finding that Google required smartphone manufacturers to pre-install Google Search, Chrome, and the Google Play Store on Android devices. Regulators also said Google restricted manufacturers from using alternative versions of Android, limiting competition from other mobile platforms.

    In its ruling, the court stated, “The appeal brought by Google and its parent company Alphabet against the judgment of the General Court is dismissed, thereby confirming the penalty imposed for Google Search’s abuse of a dominant position in the context of the Android operating system.” A lower court had reduced the fine to €4.1 billion in 2022, and today’s decision makes that penalty final.

    Following the ruling, a Google spokesperson defended the company’s Android business model, saying, “This judgment fails to take into account our investment to ensure Android remains open, interoperable and free.” The spokesperson added, “In any event, we adapted our agreements to comply with the initial decision back in 2018 and we remain focused on continued innovation and openness for our users, partners and developers.”

    Over the past several years, Google has already implemented changes for Android users in Europe, including allowing device owners to choose different search engines and web browsers during device setup instead of automatically using Google’s services.

    This case is part of a broader series of antitrust investigations. Over the past decade, Google has faced nearly €11 billion in EU competition fines across multiple cases involving search, shopping, Android, and digital advertising. The European Commission has now expanded its focus beyond traditional competition law, enforcing the Digital Markets Act and Digital Services Act, which introduce new obligations for major tech companies.

    Google remains under investigation over alleged preferential treatment of its own products in search results and practices involving its app store. Other large technology companies, including Apple and Meta, are also facing scrutiny under the EU’s updated digital regulations. Alphabet shares traded modestly lower in premarket trading following the ruling.