Overview
- The Malta Financial Services Authority published a discussion paper on June 18 that opens a public consultation running until July 10 to gather industry views on how decentralized finance should be treated under the EU's Markets in Crypto-Assets framework.
- The paper flags common centralized controls in many DeFi projects, naming administrator keys, concentrated governance, protocol upgrade powers and control of user-facing interfaces as features that complicate a claim of full decentralization.
- Regulators are asking whether decentralization should be assessed as a spectrum rather than a yes-or-no test and are seeking feedback on creating a standardized test to determine when a protocol falls outside MiCA’s scope.
- The MFSA is also asking whether licensed firms should be required to carry out smart-contract audits, governance reviews and risk assessments before integrating DeFi, and it is exploring legal models such as DAOs, segregated cell companies and new ‘software-based organization’ categories plus automated overseers called guardian agents.
- Any changes would follow this information-gathering phase; the consultation could shift which projects and regulated firms must comply with MiCA, affect investor protections and operational checks, and prompt new legal wrappers for code-governed entities.