Malta's financial regulator explores bringing parts of DeFi under MiCA's orbit
Key takeaways
- MSFA's paper also asks whether regulated crypto firms should be required to conduct smart-contract audits, governance reviews and risk assessments before integrating DeFi protocols into their services.
- Beyond MiCA, the MFSA outlines potential legal structures for DeFi projects, including decentralized autonomous organizations (DAOs) and segregated cell companies.
- The discussion paper is open to public responses until July 10.
Malta's financial regulator is exploring how decentralized finance (DeFi) could fit within the European Union's Markets in Crypto-Assets (MiCA) framework, focusing on governance, accountability and the meaning of "full decentralization."
The Malta Financial Services Authority (MFSA) said that while MiCA excludes cryptocurrency services provided in a "fully decentralised manner without any intermediary," many DeFi projects retain centralized features such as administrator keys, governance concentration, protocol upgrade rights and control over user-facing interfaces, in a discussion paper published Wednesday.
The regulator is seeking feedback on whether decentralization should be assessed as a spectrum rather than a binary concept and whether a standardized framework should be developed to determine when a protocol falls outside MiCA's scope.