The European Securities and Markets Authority (ESMA) and Aave Labs submitted separate September 30 responses to the European Commission’s review of the Markets in Crypto-Assets Regulation (MiCA), proposing different approaches to decentralized finance (DeFi), stablecoins, staking, lending, borrowing, self-custody and tokenized assets. ESMA sought powers to block fraudulent websites, freeze assets linked to suspected market abuse or terrorist financing, address unauthorized third-country firms and restrict regulated firms’ links to non-compliant stablecoins. Aave argued that regulation should target identifiable persons exercising ongoing control rather than automatically treating open-source software as financial intermediation, while seeking protections for self-custody, global stablecoin liquidity and borrower-funded lending returns. On October 2, Aave founder Stani Kulechov criticized European Central Bank (ECB) and European Banking Authority (EBA) consultation responses, warning that a DeFi suitability test and possible certification requirements for lending protocols could create restricted, walled-off environments around open networks. The Commission is assessing whether MiCA remains fit for purpose, with ESMA saying feedback could support an updated framework by mid-2027.