Malta's financial regulator is actively seeking input on a proposed legal framework for decentralized finance (DeFi), with a public consultation that runs until July 10. The Malta Financial Services Authority (MFSA) has outlined a discussion paper that aims to define decentralized autonomous organizations (DAOs) as a new category of software-based organizations under the European Union's Markets in Crypto-Assets (MiCA) regulation.
This initiative reflects Malta’s ongoing commitment to the digital asset sector, having established one of the first comprehensive crypto regulatory frameworks in 2018. The MFSA’s proposal focuses on the complexities of DeFi, emphasizing that many projects, while branded as decentralized, possess centralized elements that challenge their claims to decentralization. This is particularly relevant as MiCA excludes entirely decentralized entities from its regulatory reach.
By situating DAOs within a broader category of software-governed organizations, the MFSA aims to differentiate the legal framework governing these entities from the protocols and software they operate on. This approach aligns with the EU's growing efforts to clarify the regulatory landscape for DeFi and DAOs.