Malta proposes DeFi rulebook to bring DAOs under MiCA

The Malta Financial Services Authority opened a public consultation on June 12 proposing a legal framework for decentralized finance that would recognise decentralized autonomous organizations as ‘software-based organisations’ under the EU Markets in Crypto-Assets regulation. The consultation runs until July 10.

The MFSA’s discussion paper proposes a new legal category to cover DAOs and other entities governed primarily by code. The regulator proposes separating the legal regime that applies to the organisation from the rules that apply to the underlying protocol and software.

The paper invites technical and policy input on how that split should work in practice and on the scope of obligations for organisations operating through software and community governance.

The regulator noted that MiCA excludes fully decentralised models from its scope. The paper states, “MiCA excludes fully decentralised models from its regulatory scope, meaning that projects without intermediaries or central control may not need to comply with MiCA.” The MFSA said identifiable control points in some projects raise questions about who is accountable and may bring those projects within regulatory scope.

Malta established one of the region’s first broad digital-asset regulatory frameworks in 2018. The MFSA framed the consultation as an effort to clarify when existing legal obligations apply to software-governed organisations and where new rules may be needed.

European institutions are reviewing how DeFi fits within MiCA. An earlier European Central Bank working paper found governance and control across several major DeFi protocols remained highly concentrated, which suggests some projects may not qualify as fully decentralised. In May, the European Commission launched a targeted review of MiCA seeking feedback on the treatment of DeFi, stablecoin interest payments and potential gaps in the framework.

Not all advisers support a separate DeFi rulebook. Peter Kerstens, a European Commission adviser, recommended integrating tokenisation into a wider digital-asset framework rather than creating a second version of MiCA focused solely on DeFi.

Responses to the MFSA consultation will inform the authority’s next steps and may affect how national and EU-level authorities apply MiCA to software-governed organisations and related services.