Aave Labs has submitted a response to the European Commission’s review of the Markets in Crypto-Assets Regulation (MiCA), calling for rules that accommodate decentralized finance (DeFi), stablecoins, tokenization and self-custody. The company argues that MiCA was largely designed for the first generation of crypto markets, including issuers, exchanges and custodians, while the next phase will involve onchain lending, collateral, settlement and savings. Aave says regulation should focus on identifiable persons who control activities and exercise ongoing discretion, rather than automatically treating open-source software as a financial intermediary. It also wants MiCA’s stablecoin interest restrictions clarified so they do not cover borrower-funded lending returns or staking rewards. The submission seeks clearer EU rules for tokenized assets, continued access to global stablecoin liquidity and supervisory tools such as blockchain analytics, observer nodes and machine-readable disclosures. The response forms part of the European Commission’s broader assessment of whether MiCA remains fit for purpose after its initial implementation and market developments.