Aave Founder Stani Kulechov: Opposes Blocking DeFi
Aave founder Stani Kulechov expressed disappointment with the European Central Bank and the European Banking Authority's response to the MiCA consultation. He stated that both institutions advocate not only for a ban on interest payments for stablecoins but also suggest restricting crypto asset service providers from offering users access to DeFi.
The restrictions include yield protocols involving stablecoins not authorized under MiCA, but the actual implementation framework is unclear. His exact words were that it is not clear how these requirements will operate in practice. The European Central Bank's system, in a 57-page response, argued that the interest ban on stablecoins should not only cover services regulated by MiCA but should also extend to currently unregulated crypto lending, borrowing, and staking, viewing liquidity mining, reward points, fee reductions, and bundled services in DeFi as disguised interest payments.
The European Banking Authority, in its response on September 24, suggested that the European Commission assess the regulation of crypto asset lending, including cases where providers direct customers to decentralized lending protocols. The proposal also mentioned limiting access to DeFi for users through suitability tests and considering certification for DeFi lending protocols. Kulechov stated that if regulators decide which protocols are suitable for European users, the result will be more walled gardens.
He believes that these walls will weaken the liquidity and network effects of open financial networks, increase resistance to innovation, and slow down the development of open, transparent, and auditable infrastructure. He described stablecoins, DeFi, and tokenized securities as tools to reduce friction in financial services, enhance transparency, and expand access to financial opportunities, urging European regulators to place user interests at the center of the framework. His concluding remark was: DeFi will ultimately prevail.
The existing MiCA requires stablecoin issuers to hold at least 30% of reserves in bank deposits, with important stablecoins requiring 60%. The central banking system also suggested removing this lower limit, replacing it with a requirement to hold reserves based on the maturity liquidity of assets, and reiterated that the globally issued, interchangeable token model is not permitted under current rules. The consultation corresponding to the MiCA review deadline is before mid-2027.
This is driven by regulatory expectations, not on-chain trading. The restrictions affect licensed service providers in Europe directing customer funds to lending pools like Aave, as well as protocols using unauthorized stablecoins for yield. If implemented, funds would shift from public lending pools to licensed, certified, or suitability-tested closed entrances. Beneficiaries would be eurozone bank deposits and licensed service providers; those under pressure would be protocols relying on stablecoin deposit rates to attract European users, as well as exchanges and wallets treating DeFi access as a customer acquisition channel.
Source: Public Information
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Stani Kulechov launched ETHLend in 2017, later rebranded to Aave, creating over-collateralized lending as a public pool. Aave has since separately launched a licensed market for institutions called Aave Arc, which is essentially a whitelist entry; GHO is a stablecoin issued by the protocol, with yields retained in the Aave pool. His current opposition to certification and suitability testing is similar to the whitelist used by Arc, just changing the gatekeeper from the protocol to regulators.
The European Central Bank aims to extend the interest ban from licensed service providers to lending, borrowing, and staking, while the European Banking Authority includes the assessment of service providers "providing access." Thus, the flow of money changes from users directly entering pools to going through licensed service providers, suitability tests, and potential protocol certifications. If reserve rules shift from a 30% minimum for stablecoin issuers and 60% for significant issuers in bank deposits to a ratio of one-day and five-day maturity assets, stablecoin issuers would hold less in banks and more in short-duration assets, leading banks to lose statutory deposits and protocols to lose the loanable balance of compliant European stablecoins.
This parallels discussions in the U.S. on stablecoin legislation, where yields are shifted from issuers to exchanges, and Coinbase's revenue sharing with USDC is under regulatory scrutiny. Aave is at a control stage: the liquidity of the public pool is already substantial, and new constraints are not in the code but in which entrance European users come through.
Structurally, this represents a regulatory change. MiCA originally regulated issuers and licensed service providers, but the consultation response aims to include unregulated lending and "accessing DeFi" under the same ban. The mechanism is that stablecoin yields would bypass the interest ban, flowing back to users from protocol deposit rates, and central banks and banking regulators aim to close this bypass and determine which pools European funds can enter through certification.
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Prohibiting interest will reroute yields from protocols.
Gatekeeping access will turn open pools into walled gardens.
Regulation decides who can enter, and liquidity will no longer be universal.